Delinquency rate doubles the peak of the Great Recession

As of July 2020, 6.6% of mortgages in the United States were 30 days or more past due, including those in foreclosure; this represents a 2.8 percentage point increase in the overall delinquency rate compared to July 2019.

CoreLogic Loan Performance Insights report measures mortgage performance through July and is available in full here (when connecting).

“Measuring early-stage default rates is important in analyzing the health of the mortgage market. To more comprehensively monitor mortgage performance, CoreLogic examines all stages of default as well as transition rates which indicate the percentage of mortgages going from one stage of default to the next, “the company noted. To do this, he broke down the unpaid bills in stages:

  • 30-59 days (early delinquency) 1.5% in July 2020, compared to 1.8% last July.
  • 60 to 89 days: up 1% from 0.6% in July 2019.
  • More than 90 days (serious delinquency): 4.1%, against 1.3% in July 2019. “This is the highest serious delinquency rate since April 2014,” CoreLogic reported.
  • Mortgages that went from current to 30 days past due: 0.8% in July 2020, unchanged from July 2019. “The transition rate has slowed since April 2020, reports CoreLogic, when it peaked at 3 , 4%.

In addition, “four months after the start of the pandemic, the 120-day delinquency rate for July has reached 1.4%,” said Dr Frank Nothaft, chief economist at CoreLogic. “This was the highest rate in over 21 years and double the peak of the Great Recession of December 2009. The peak in delinquency was all the more astonishing given the generational low of 0.1% in March. . “

CoreLogic reports that despite the house values ​​(measured by the CoreLogic Home Price Index) Rising at an accelerating pace, “Unemployment levels in hard-hit areas remain stubbornly high, leaving some borrowers housing-rich but cash-poor.

“Despite the slow reopening of several sectors of the economy, the recovery of other industries such as entertainment, tourism, oil and gas has a more uncertain outlook for the remainder of 2020. With the persistence of the labor market and Income instability, Americans continue to dip into their savings to stay up to date on their home loans. But as savings run out, borrowers could be pushed further down the delinquency funnel. “

COVID-19 hotspots continue to suffer the greatest economic fallout, reports CoreLogic, with Nevada, New Jersey, New York, Hawaii and Florida leading the states with the highest overall delinquencies.

For more details, methodology and to see which states are hit hardest by the current recession, visit CoreLogic.

Maria J. Book