U.S. mortgage default rates stabilize in February

According to the latest CoreLogic monthly Loan Performance Report, as of February 2021, 5.7% of all mortgages in the United States were at some stage of late payment (30 days or more past due, including those in foreclosure). This represents an increase of 2.1 percentage points in the overall delinquency rate compared to February 2020. The slight increase (0.1 percentage point) from January 2021 marks the first monthly increase in national delinquency since August 2020 .

To get an accurate view of the mortgage market and the health of loan performance, CoreLogic examines all stages of delinquency. As of February 2021, the default and transition rates in the United States, as well as their year-to-year variations, were as follows:

  • Early delinquencies (30 to 59 days overdue): 1.5%, compared to 1.8% in February 2020.
  • Unfavorable delinquency (60 to 89 days overdue): 0.5%, compared to 0.6% in February 2020.
  • Serious delinquency (90 days or more past due, including loans in foreclosure): 3.7%, up from 1.2% in February.
  • Foreclosure inventory rate (the share of mortgages at a certain stage of the foreclosure process): 0.3%, up from 0.4% in February 2020.
  • Transition rate (the share of mortgages that went from current state to 30 days past due): 0.9%, unchanged from February 2020.

Government support throughout the pandemic and improving employment rates have allowed more borrowers to stay up to date on their mortgages than would otherwise have been the case. With a more optimistic economic outlook, consumer confidence has improved. In fact, according to a recent CoreLogic consumer survey, 8 in 10 respondents indicated that they were unlikely to fall behind on their mortgage payment based on their current financial situation.

“Overall delinquency edged up in February, but delinquency and foreclosure rates continued to decline each month,” said Frank Martell, President and CEO of CoreLogic. “Consumer confidence continues to rise as the economy comes to life. These factors bode well for housing fundamentals in 2021 and as far as the eye can see.”

Dr Frank Nothaft

“Some families who had overspended during the holiday season, and then faced financial hardship in the New Year, could lose their mortgage by February,” said Dr Frank Nothaft, Chief Economist at CoreLogic. “In each of the past five years, the 30-day delinquency rate increased from January to February. As economic conditions improve, we expect delinquency rates to decline in the coming months.”

State and metro to take away:

  • All U.S. states and nearly all metropolitan areas recorded increases in overall annual delinquency rates in February.
  • Hawaii and Nevada (both up 4 percentage points) again recorded the largest annual increase in overall delinquency rates in February.
  • Among subways, Odessa, Texas, which is still recovering from job losses in the oil industry, recorded the largest annual increase in delinquency with 9.9 percentage points.
  • Other metropolitan areas with significant overall increases in delinquency include Midland, Texas (up 7.7 percentage points); Kahului, Hawaii (up 6.5 percentage points) and Lake Charles, Louisiana (up 6.2 percentage points).

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