Homeowners look to income growth and home equity wealth to manage their mortgage debt
IRVINE, Calif.–(BUSINESS WIRE)–CoreLogic, a leading global property information, analytics and data-enabled solutions provider, today released its monthly Loan Performance Insights Report for August 2021.
For the month of August, 4% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 2.6-percentage point decrease in delinquency compared to August 2020, when it was 6.6%.
To gain a complete view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency. In August 2021, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows:
- Early-Stage Delinquencies (30 to 59 days past due): 1.1%, down from 1.5% in August 2020.
- Adverse Delinquency (60 to 89 days past due): 0.3%, down from 0.8% in August 2020.
- Serious Delinquency (90 days or more past due, including loans in foreclosure): 2.6%, down from 4.3% in August 2020.
- Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.2%, down from 0.3% in August 2020. This remains the lowest foreclosure rate recorded since CoreLogic began recording data (1999).
- Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.6%, down from 0.9% in August 2020.
Facing slower than anticipated employment growth — August saw an increase of only 235,000 new jobs compared to the expected 720,000 — households have found creative ways to cut back on spending to prioritize mortgage payments. In a recent CoreLogic survey, over 30% of respondents said they would cut back on both entertainment and travel to focus on repaying outstanding debt. Income growth and a continued buildup in home-equity wealth will be important parts of financial recovery for borrowers hit hardest by the pandemic.
“The unprecedented fiscal and monetary stimuli that have been implemented to combat the pandemic are pushing housing prices and home equity to record levels,” said Frank Martell, president and CEO of CoreLogic. “This phenomenon is driving down delinquencies and fueling a boom in cash-out refinancing transactions.”
“The decline in the overall delinquency rate to its lowest since the onset of the pandemic is good news, but it masks the serious financial challenges that some of the borrower population has experienced,” said Dr. Frank Nothaft, chief economist at CoreLogic. “In the months prior to the pandemic, only one-in-five delinquent loans had missed six or more payments. This August, one-in-two borrowers with missed payments were behind six-or-more monthly installments, even though the overall delinquency rate had declined to the lowest level since March 2020.”
State and Metro Takeaways
In August 2021, all states saw year over year declines in their overall delinquency rate. New Jersey (down 4.0 percentage points); Florida (down 3.8 percentage points); and Nevada (down 3.6 percentage points), saw the largest year over year declines. All other states experienced decreases between -1.3 and -3.3 percentage points.
All U.S. metropolitan areas posted at least a small annual decrease in their overall delinquency rate. The largest annual decreases were in Laredo, Texas (down 6.3 percentage points), Miami-Fort Lauderdale-Pompano Beach, Florida (down 5.7 percentage points), McAllen-Edinburg-Mission, Texas (down 5.3 percentage points) and Atlantic City-Hammonton, New Jersey (down 5 percentage points).
CoreLogic Intelligence Blog
The next CoreLogic Loan Performance Insights Report will be released on December 14, 2021, featuring data for September 2021. For ongoing housing trends and data, visit the CoreLogic Intelligence Blog: here.
The data in The CoreLogic LPI report represents foreclosure and delinquency activity reported through August 2021. The data in this report accounts for only first liens against a property and does not include secondary liens. The delinquency, transition and foreclosure rates are measured only against homes that have an outstanding mortgage. Homes without mortgage liens are not subject to foreclosure and are, therefore, excluded from the analysis. CoreLogic has approximately 75% coverage of U.S. foreclosure data.
About the CoreLogic Consumer Housing Sentiment Study
3,000+ consumers were surveyed by CoreLogic via Qualtrics. The study is an annual pulse of U.S. housing market dynamics concentrated on consumers looking to purchase a home, consumers not looking to purchase a home, and current mortgage holder. The survey was conducted in April 2021 and hosted on Qualtrics. The survey has a sampling error of~3% at the total respondent level with a 95% confidence level.
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