Early-stage mortgage delinquencies dip again in November as hurricanes’ impact wanes

CoreLogic, a leading global property information, analytics and data-enabled solutions provider, has released its monthly Loan Performance Insights Report which shows that, nationally, 5.1 percent of mortgages were in some stage of delinquency (30 days or more past due including those in foreclosure) in November 2017. This represents a 0.1 percentage point year-over-year decline in the overall delinquency rate compared with November 2016 when it was 5.2 percent.

As of November 2017, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.6 percent, down 0.2 percentage points from 0.8 percent in November 2016. The foreclosure inventory rate has held steady at 0.6 percent since August 2017, the lowest level since June 2007 when it was also at 0.6 percent. This past November’s foreclosure inventory rate was the lowest for the month of November in 11 years, since it was also 0.6 percent in November 2006.

Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. To monitor mortgage performance comprehensively, CoreLogic examines all stages of delinquency as well as transition rates, which indicate the percentage of mortgages moving from one stage of delinquency to the next.

The rate for early-stage delinquencies, defined as 30-59 days past due, was 2.2 percent in November 2017, down 0.1 percentage points from 2.3 percent in October 2017 and unchanged from 2.2 percent in November 2016. The share of mortgages that were 60-89 days past due in November 2017 was 0.9 percent, unchanged from October 2017 and up from 0.7 percent in November 2016. The serious delinquency rate, reflecting loans 90 days or more past due, was 2.0 percent in November 2017, up from 1.9 percent in October 2017 and down from 2.3 percent in November 2016. Prior to November 2017, the serious delinquency rate had held steady for five consecutive months at 1.9 percent—the lowest level for any month since October 2007 when it was also 1.9 percent.

“The effects of Hurricanes Harvey, Irma and Maria appear clearly in our mortgage delinquency report,” said Dr. Frank Nothaft, chief economist for CoreLogic. “Serious delinquency rates are up sharply in Texas and Florida compared with a year ago, while lower in all other states except Alaska. In Puerto Rico, the serious delinquency rate jumped to 6.3 percent in November, up 2.7 percentage points compared with a year before. In the Miami metropolitan area, serious delinquency was up more than one-third from one year earlier to 5.1 percent, and it more than doubled to 4.6 percent in the Houston area.”

Since early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from current to 30 days past due was 1 percent in November 2017, down from 1.1 percent in October 2017 and unchanged from 1 percent in November 2016. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2 percent and it peaked in November 2008 at 2 percent.

“Transition rates for 60-day and 90-day delinquency, while stable across most of the country, were up sharply in many areas impacted by the 2017 hurricanes,” said Frank Martell, president and CEO of CoreLogic. “In many of the harder-hit regions, such as the Houston and Miami metropolitan areas, housing stock availability has taken a hit as many homes were damaged and are no longer habitable. As a result, we expect to see further upward pressure on prices and rents for habitable homes, which will continue to erode affordability.”