Delinquencies Dropped Again In August, Though Starts Rose

The historically low delinquency rate dropped further in August, closing in on May 2022’s record low, but rising foreclosure starts may cause it to increase, according to Black Knight’s First Look at August 2022 mortgage data.

Nationally, delinquencies dropped 3.6% in August to 2.79%. This is just four basis points above May’s record.

Improvements were seen across the spectrum of borrowers, with the number of those owing only a single late payment down 4%. Those 90 or more days delinquent fell by 4.5%.

Cure activity also increased, with 62,000 seriously delinquent loans curing to current status. Cure rates refer to loans that were delinquent in the prior month but are now current.

Start activity rose 15% from July, though it remains 44% below August 2019 levels.

Starts were initiated on 3.4% of serious delinquencies, still less than half the rate seen before the pandemic.

Overall delinquencies continue a trend that began last year: increases seem worse than they are because of percentages. This is especially true when it comes to foreclosures, which are nearly back to pre-pandemic levels but are still historically low.

“It’s hard to believe that a 400% increase in foreclosure activity is not a problem. But when you go from one to three, it’s a 200% increase,” Rick Sharga, executive vice-president of market intelligence at ATTOM, explained.

“So what we’re seeing right now are percentage increases that are just extraordinarily high, but only because the numbers we saw a year ago were historically low. So, no cause for panic, at least not yet.”