The U.S. serious delinquency rate took another step forward in May, dropping to its lowest level since last June, according to the latest Loan Performance Insights report from CoreLogic.
Approximately 3.2% of all loans were seriously delinquent, at least 90 days past due, according to CoreLogic’s data. While still high (year over year, the serious delinquency rate was up from 1.5% in May 2020), the share of serious delinquencies has continued a pattern of improvement and is down substantially from its pandemic-era peak of 4.3% in August 2020.
Overall, 4.7% of all U.S. mortgages were in some stage of delinquency in May, down 2.6 percentage points from the same month last year. The share of early-stage delinquencies (30-59 days past due) was at 1.2%, down from 3.0% in May 2020. Adverse delinquencies (60-89 days past due) comprised just 0.3% of all loans, down from 2.8% the previous May.
Mortgage-carrying borrowers continue to maintain a strong record of making their payments during the pandemic, with the share of mortgages transitioning from current to 30 days past due at 0.7%, down from 2.2% in May 2020. For those struggling to make their mortgage payments, some relief has come in the form of growing equity as home values have been pointed decidedly upward for the past few months. CoreLogic reported in May that the median borrower in forbearance holds some $101,176 in estimated home equity, or $87,895 in estimated equity excluding missed payments.
“The rise in home prices has built a substantial home equity cushion for homeowners with a mortgage, reducing the risk of a foreclosure,” said Frank Nothaft, chief economist at CoreLogic. “The CoreLogic Home Price Index recorded an annual increase of 17% in June. This price rise builds home equity. For most borrowers in forbearance, the equity gain means they’ll still have some remaining — even if missed payments are added to their loan balance.”
Due to those significant equity gains coupled with the prevalent availability of both government assistance and loan modifications, CoreLogic expects that most borrowers with delinquent mortgages have access to enough support to fend off a foreclosure crisis, even after the expiry of federal anti-foreclosure measures.
“The pandemic has created many challenges but, in the case of delinquencies, the impacts have been relatively muted thanks to numerous government support programs and the sharp snapback in economic activity over the past several quarters,” said Frank Martell, president and CEO of CoreLogic. “Looking forward, we expect a robust economy and near-zero interest rates to hold delinquency levels at reasonable levels.”
