Photo: Robert Clark
In June, a strong US economy pushed the national mortgage delinquency and foreclosure rate to its lowest level in 12 years, according to a new report from CoreLogic.
“A solid labor market provided the financial strength for more homeowners to remain current on their mortgage and high-risk loan products that were popular before the Great Recession, such as no-documentation loans, have largely vanished from the market, improving performance of loans made in recent years,” CoreLogic chief economist Dr. Frank Nothaft tells Livabl.
At the national level, 4.3 per cent of all mortgages were in some stage of delinquency in June 2018, a drop of 0.3 percentage points from last year.
But some metros managed to buck the national trend and saw an uptick in delinquencies.
“While the labor market has improved in nearly all metropolitan areas, there are some where the labor market has had an uptick in unemployment,” says Nothaft.
The foreclosure inventory rate — which measures the share of mortgages in some stage of the foreclosure process — was 0.5 percent, down 0.2 percentage points from June 2017.
June’s foreclosure inventory rate was the lowest since September 2006, and was the lowest for June since 2006.
Two states impacted by recent hurricane activity, Florida and Texas, posted measured annual gains in overall delinquency rates. The CoreLogic report notes that “the risk to mortgages in the months following a natural hazard can be substantial.”
In the year following hurricanes Harvey, Irma and Maria, serious delinquency rates on home mortgages tripled in the Houston, Texas, and Cape Coral, Florida metro areas.
Delinquency rates quadrupled in San Juan, Puerto Rico.
“Job loss, which leads to income decline, and home price declines are two important factors that cause delinquency and foreclosure rates to rise,” says Nothaft.
Looking ahead, Nothaft remains cautiously optimistic about the national mortgage delinquency and foreclosure rate.
“Most economists anticipate the unemployment rate will likely decline gradually by the end of 2018, which will support family income and provide the financial wherewithal for more families to remain current on their mortgage payment,” he says.
And a gradual decline in delinquency and foreclosure rates will likely follow in most major metro areas.
Click here to read the entire report.