Amazing Reasons to Be Positive Despite Increase in Delinquency

Delinquency rates continue to increase as financial struggles perpetuate millions of homeowners. But data shows the housing market is in good shape.

Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. CoreLogic examines all stages of delinquency. It also includes transition rates of mortgages from one stage to the next. This procedure helps to comprehensively monitor mortgage performance. 

On Tuesday, CoreLogic published its data for September 2020 showing a 6.3% nationwide increase of mortgages that are 30-plus days past due.

These numbers include mortgages in foreclosure. It represents a 2.5-percentage point increase in the overall delinquency rate between September 2019 and September 2020.

Various factors in place put the housing market at a bright spot despite a COVID-ravaged economy.

• High home equity
• Structural protections after the Great Recession
• Persistent housing demand 
• Record-low mortgage rate

The rate and stages of delinquencies, according to CoreLogic, break down as follows:

• Early-Stage Delinquencies (30 to 59 days past due): 1.5%, down from 1.9% in September 2019, and down from 4.2% in April when early-stage delinquencies spiked.
• Adverse Delinquency (60 to 89 days past due): 0.7%, up from 0.6% in September 2019, but down from 2.8% in May, when adverse-stage delinquencies peaked.
• Serious Delinquency (90 days or more past due, including loans in foreclosure): 4.2%, up from 1.3% in September 2019, but down slightly from 4.3% in August.
• Foreclosure Inventory Rate (at the stage of the foreclosure process): 0.3%, down from 0.4% in September 2019.
• Transition Rate (from current to 30 days past due): 0.8%, unchanged from September 2019. The transition rate has slowed since April 2020, when it peaked at 3.4%.

Analysis of CoreLogic’s report

• Foreclosures remain low because of the government’s intervention through the CARES Act. Also, the Frank-Dodd Act protects consumers from risky lending practices.

• Serious delinquencies (90-plus days past due) have leveled out for the first month since April.
  
• Homeowners who lapsed on mortgages in earlier 2020 will continue to move through the delinquency funnel. Each state showed an annual increase in its overall delinquency rate. 

Popular tourism destinations showed the highest increases in the past few months. Below are the states with its corresponding increase in points;

1.  Nevada (4.9 percentage points)
2. Hawaii (4.7 percentage points)
3. Florida (4 percentage points)
   

Lake Charles, Louisiana which was devastated by Hurricane Laura in August, experienced the largest annual increase of 10.7 percentage points. Followed by other metro areas such as;

1. Odessa, Texas (10.3 percentage points)
2. Midland, Texas (7.9 percentage points)
3. Kahului, Hawaii (7.5 percentage points).

Analytics Before Foreclosure is another factor that has contributed to the relief against foreclosures. Homeowners have alleviated their stress and burden with the actionable intelligence from Analytics Before Foreclosure.

All the contributing factors create a buffer against both delinquency and foreclosure. Thus, it helped the housing market survive the initial stress test. Furthermore, the same factors will give enough reasons to be optimistic for the long road ahead.