Serious Delinquencies Spike Despite Heightened Housing Demand

Serious Delinquencies Spike Despite Heightened Housing Demand

October 14, 2020
A man with his hand to his head stressed over bills.

CoreLogic's Loan Performance Insights for July 2020 reported that serious delinquencies reached 4.1%, its highest rate since April 2014. The LPI also showed 6.6% of mortgages were in some stage of delinquency nationwide in July 2020, a 2.8% increase to the overall delinquency rate compared to July 2019.

According to the report, early-stage delinquencies (30 to 59 days past due) dipped to 1.5% from 1.8% the previous year and was also down from April's 4.2% spike. Adverse delinquency (60 to 89 days past due) increased stood at 1%, down from 2.8% in May. Additionally, the foreclosure inventory rate came in at 0.3%, the lowest for any month in at least 21 years, according to the report.

While home values continue to increase at a substantial rate, CoreLogic reports that the unemployment levels are still quite high in some of the harder impacted areas across the U.S. The report also finds that many Americans are tapping into their savings in order to stay current on their home loans and as those savings run out, borrowers may inevitably be pushed further into the delinquency funnel.

"Many Americans, particularly millennials, are taking advantage of low rates to either purchase their first home or upgrade their living situations," said Frank Martell, president and CEO of CoreLogic. "However, given the unsteadiness of the job market, many homeowners are beginning to feel the compounding pressures of unstable income and debt on personal savings buffers, creating a heightened risk of falling behind on their mortgages."

"Four months into the pandemic, the 120-day delinquency rate for July spiked to 1.4%," said Dr. Frank Nothaft, chief economist at CoreLogic. "This was the highest rate in more than 21 years and double the December 2009 Great Recession peak. The spike in delinquency was all the more stunning given the generational low of 0.1% in March."

CoreLogic also reported that all states logged annual increases in both overall and serious delinquency rates in July. The company also predicts that U.S. metros that were hit hard by job loss in the oil and gas industries such as Odessa, Texas, are projected to leave millions of jobs unrestored throughout the remainder of the year.

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