CoreLogic’s latest Loan Performance Insights report revealed that the nation’s residential mortgage-delinquency rate this past July was the lowest figure for that month in at least two decades.
The share of mortgages in July 2019 that were delinquent by at least 30 days or more, including those in foreclosure, was 3.8%. That’s down by 0.3 percentage points year over year and is hovering around the lowest level since at least 1999. According to Frank Martell, CoreLogic’s president and CEO, that figure may not be done receding.
“The fundamentals of the housing market remain very solid, with foreclosure rates hitting lows not seen in over 20 years,” Martell said. “We expect foreclosure rates may very well drift even lower in the months ahead as wage growth and lower mortgage rates provide support for homeownership.”
One reason for the drop in delinquencies is the growth in equity over the past decade, explained Frank Nothaft, CoreLogic’s chief economist.
“Homeowners have seen a big rise in home equity, which lowers foreclosure risk because owners have more ‘skin in the game,’” Nothaft said. “Our latest home equity report found that between the first quarter of 2011 and the second quarter of 2019, average equity per borrower increased from $75,000 to $176,000, and rose $5,000 in the past year alone.”
Additionally, fewer mortgages are transitioning from one stage of delinquency to the next. The share of delinquent mortgages that moved from current to 30 days past due was unchanged on an annual basis in July at 0.8%. The transition rate from 30 to 60 days past due, however, fell from 15.1% in July 2018 to 13.8% in July 2019. Similarly, the transition rate from 60 to 90 days overdue decreased from 25.3% in July 2018 to 24% in July 2019.
Some “delinquency hotspots” persist, however. Four states posted small year-over-year increases this past July in their overall delinquency rates: Minnesota and Iowa (both up by 0.1 percentage points), New Hampshire (up by 0.2) and Vermont (up by 0.5). Similarly, while almost every state saw its rate of serious delinquencies (90 days or more past due, including foreclosures) fall, five were unchanged: Minnesota, Iowa, Nebraska, North Dakota and South Dakota.
Thirty-seven metro areas saw their overall delinquency rates rise, with some of the highest gains concentrated within the Midwest and Southeast regions. Dubuque, Iowa, saw the largest annual increase in July of this year at 2.5 percentage points, followed by the Iowa-Illinois metro area of Davenport-Moline-Rock Island, at 1.5 percentage points, and Pine Bluff, Arkansas at 1.1 percentage points.