Mortgage delinquency rates continued to fall in
October, with the national rate ticking down 0.1 percent and the percentage of
non-current loans declining in all but three states. While perennial trouble spots Louisiana,
Mississippi, New York, and New Jersey all saw loans that were 30 or more days
past due decline by one-half percentage point or more, delinquencies were up
year over year in Texas and Florida, the states hardest hit by Hurricanes
Harvey and Irma, and in Alaska.
CoreLogic reports the national delinquency rate, which
was 5.2 percent in October 2016 was down to 5.1 percent a year later. However, the company’s monthly Loan Performance Insights Report indicates
that the decrease came exclusively from the pool of serious delinquencies;
early delinquencies increased. The percentage of loans 30 to 60 days past due
ticked up 0.1 percent year-over-year to 2.3 percent, although they were down 0.1
percent from September. The share of mortgages that were 60-89 days past due in October 2017 was
0.9 percent, up 0.2 percentage points from 0.7 percent in both September 2017
and October 2016.
The serious delinquency rate,
reflecting loans 90 days or more past due, was 1.9 percent in October,
unchanged from the previous four months, and down 0.4 percentage points from October
2016. The percent rate in June, July, August, September and October of this
year marks the lowest level for any month since it was also 1.9 percent in
The year-over-year delinquency rate in
the two hurricane stricken states increased substantially even as their serious
delinquency rate declined. In Florida
overall delinquencies rose from 6.4 percent in October 2016 to 9.7 percent but
serious delinquencies fell to 2.7 percent from 3.3 percent. In Texas the
overall rate rose from 5.5 percent to 6.8 percent while serious delinquencies were
unchanged at 1.9 percent.
In Alaska, the third state where
loan performance deteriorated, both overall and serious rates were up, from 2.5
percent to 2.9 percent and 1.0 to 1.1 percent, indicating longer term problems.
“After rising in September,
early-stage delinquencies declined by 0.1 percentage points month over month in
October. The temporary rise in September’s early-stage delinquencies reflected
the impact of the hurricanes in Texas, Florida and Puerto Rico, but now the
impact from the hurricanes is fading from a national perspective,” said
Dr. Frank Nothaft, chief economist for CoreLogic. “While the national
impact is waning, the local impact remains. Some Florida markets continue to
see increases in early-stage delinquency transition rates in October, reaching
5 percent, on average, in Miami, Orlando, Tampa, Naples and Cape Coral. Texas markets
such as Houston, Beaumont, Victoria and Corpus Christie peaked at over 7
percent in September, but are on the mend and improving in October.”
As of October 2017, the foreclosure
inventory rate, which measures the share of mortgages in some stage of the
foreclosure process, was 0.6 percent, down from 0.8 percent in October 2016.
The foreclosure inventory rate has held steady at 0.6 percent since August and
is the lowest since June 2007 when it was also at 0.6 percent.
In addition to looking at
delinquency buckets, CoreLogic also examines transition rates, which indicate
the percentage of mortgages moving from one stage of delinquency to the next. The
share of mortgages that transitioned from current to 30 days past due was 1.1
percent in October, down from 1.3 percent the previous month, and up from 1
percent year-over-year. 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.
“While the national impact of
the recent hurricanes will soon fade, the human impact will remain for years.
For example, the displacement and rebuilding in New Orleans after Hurricane
Katrina extended for several years and altered the character of the city, an
impact that still remains today,” said Frank Martell, president and CEO of
CoreLogic. “The reconstruction of the housing stock and infrastructure impacted
by the storms should provide a small stimulus to local economies. This
rebuilding will occur against a backdrop of wage growth, consumer confidence
and spending in the national economy which should continue to provide a solid
foundation for real estate demand in the storm-impacted areas and beyond.”