Delinquencies Fall Even as Half of Delinquent Borrowers are at Least Six Months Behind on Payments

CoreLogic ,  November 10, 2021

Loan Performance Insights Report Highlights: August 2021

• The nation’s overall delinquency rate was 4% in August.
• The serious delinquency rate fell to its lowest level since May 2020.

In August 2021, 4% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure), which was a 2.6-percentage point decrease from August 2020 according to the latest CoreLogic Loan Performance Insights Report . However, overall delinquencies were still above the early 2020 pre-pandemic rate of 3.6%.

Overall Delinquency Rates

The share of mortgages that were 30 to 59 days past due — considered early-stage delinquencies — was 1.1% in August 2021, down from 1.5% in August 2020. The share of mortgages 60 to 89 days past due was 0.3% in August 2021, down from 0.8% in August 2020.

The serious delinquency rate — defined as 90 days or more past due, including loans in foreclosure — was 2.6% in August, down from the pandemic peak of 4.3% in August 2020. The CARES Act provides relief to mortgage holders and has worked to keep delinquencies from progressing to foreclosure and therefore the foreclosure inventory rate — the share of mortgages in some stage of the foreclosure process — was at a 22-and-a-half year low of 0.2% in August 2021. However, the share of borrowers behind on payments by six months or more was 2% in August — making up half of the overall delinquency rate.

Stage of Delinquency: Rate of Transition

In addition to delinquency rates, CoreLogic tracks the rate at which mortgages transition from one stage of delinquency to the next, such as going from current to 30 days past due (Figure 1).

The share of mortgages that transitioned from current to 30 days past due was 0.6% in August 2021 — a decrease from 0.9% in August 2020. Low transition rates indicate that while the rate of mortgages in any stage of delinquency remained elevated, fewer borrowers slipped into delinquency than at the peak of delinquency rates in 2020.

State and Metro Level Delinquencies

All states posted annual decreases in their overall delinquency rates in August 2021 as the employment picture improved across the country compared to a year earlier. Figure 2 shows the states with the highest and lowest share of mortgages 30 days or more delinquent. In August 2021, that rate was highest in Louisiana at 7% and lowest in Idaho at 1.9%. Idaho has had one of the strongest job recoveries in the U.S. and Louisiana has had one of the weakest. As of August 2021, Idaho had recovered all of the jobs lost in March and April 2020 while Louisiana had only recovered 49% of jobs lost.

Figure 3 shows the 30-plus-day past-due rate for August 2021 for 10 large metropolitan areas. Miami and New York tied for the highest rate at 6.1%, and Denver and San Francisco tied for the lowest rate at 2.4%. Miami’s rate decreased 5.7 percentage points from a year earlier. Outside of the largest 10, all metros recorded a decrease in the overall delinquency rate. Nevertheless, elevated overall delinquency rates remain in some metros, including Odessa, Texas (10.5%); Pine Bluff, Arkansas (10.4%) and Vineland-Bridgeton, New Jersey (10.1%).

The overall delinquency rate fell to the lowest level since the onset of the pandemic. However, the decrease in delinquencies masks the serious financial challenges that a part of the borrower population has experienced. In the months prior to the pandemic, only one-in-five delinquent loans had missed six or more payments. In August 2021 one-in-two borrowers with missed payments were behind six or more months. Fortunately, large increases in home prices has given most borrowers a large home equity cushion, making foreclosure far less likely.

To learn more about the data behind this article and what CoreLogic has to offer, visit https://www.corelogic.com/.