Despite homeowners contending with taxing conditions for more than a year, mortgage performance continues to trend in the right direction, according to CoreLogic. The real estate analytics company reported that 3.8% of U.S. home loans were in some stage of delinquency as of October 2021.
That’s a decrease of 2.3 percentage points from the same month in 2020 and marked the seventh straight month that delinquencies had declined. October’s delinquency rate, in fact, is close to that of October 2019 (3.7%), before the pandemic took root in the U.S.
While the delinquency rate in some states remained high — Louisiana, for example, had 8% of all mortgages at least 30 days past due — the overall delinquency rate decreased in every state on a year-over-year basis.
“Improving economic security and the benefits of disciplined underwriting practices over the past decade are helping reduce or avoid mortgage delinquencies,” said Frank Martell, CoreLogic president and CEO. “We expect to see delinquency trend down over the balance of this year as the economy continues to rebound from the pandemic, employment grows and high levels of fiscal and monetary stimulus continues.”
Geographically, the level of loan delinquency appears heavily linked to the rebound of the labor market. The U.S. Bureau of Labor Statistics (BLS) estimated that 82% of jobs lost in March and April 2020, during the initial stages of the COVID-19 crisis, had been recovered by October 2021, a share that roughly equates to 18.2 million individuals returning to work.
But job recovery hasn’t been broad based. Louisiana, for example, had recovered only 52% of the jobs it lost in March and April 2020. Compare this to Idaho, which recovered all of its lost jobs in the same time frame, per BLS, and boasts a delinquency rate of only 1.9%, lowest among all states.
The serious delinquency rate (loans 90 days or more past due, including loans in foreclosure) was 2.2% in October 2021, down from 4.1% in October 2020. The economic recovery, coupled with forbearance programs and other loan modification initiatives, have helped to reduce the number of seriously delinquent loans by a little more than 1 million since they peaked in August 2021.
Frank Nothaft, CoreLogic chief economist, noted that about half a million more loans remained seriously delinquency in October compared to the beginning of the pandemic, suggesting that many homeowners aren’t quite out of the woods yet. Indeed, despite the falling delinquency rate, the share of borrowers who were behind on their payments by at least six months was at 1.6% in October, which accounted for about 40% of all delinquencies.