Serious Delinquencies Fell To Lowest Point Since 1999

Serious mortgage delinquencies fell to their lowest point since 1999 in August, but financial pressures could force them up in the future.

In August, 2.6% of all U.S. mortgages were in some stage of delinquency, down 0.2% YOY and 0.1% from July 2023, according to CoreLogic’s latest Loan Performance Insights Report.

Early-stage delinquencies and adverse delinquencies both increased a modest 0.1% from August 2022, but serious delinquencies declined (-0.3%) to their lowest level in nearly 25 years.

Overall, mortgage delinquencies remain near historic lows.

CoreLogic’s data reflects the stability of homeowners swimming in record-high equity. After slipping through the end of 2022, home prices shot up once again in mid-2023, giving homeowners unprecedented financial security.

With competition for well-priced homes fierce as stock shortages continue, homeowners in distress can still sell their homes and avoid foreclosure.

The foreclosure inventory rate and transition rate (the share of mortgages that transitioned from current to 30 days past due) both remained unchanged YOY, suggesting homeowners have stayed steady in their ability to make payments since last August.

CoreLogic’s next data set may not be as positive.

With financial pressures bearing down on homeowners and home buyers alike, foreclosures may tick up. Intercontinental Exchange’s First Look at September 2023 data found delinquencies up 3.29% last month, the largest annual increase in the past 2.5 years.

Serious delinquencies alone were up by 7,000 borrowers, the first increase in 2023.

Fifty-one metros saw their YOY mortgage delinquency rate increase in August, according to CoreLogic. Though borrowers overall are in strong financial positions, more cities could experience upticks in the coming months.

As interest rates creep closer to breaching the 8% mark, fewer buyers are able to enter the market, causing stagnation in some areas. For example, homes in Austin, TX, which saw listings snapped up in under a week last year, now take nearly two months to sell.

“U.S. mortgage performance remained strong in August, supported by a robust job market and a healthy economy. However, this thriving job market comes at a time when interest rates are quickly rising, which is keeping many potential homebuyers from being able to secure a mortgage,” said Molly Boesel, principal economist at CoreLogic. 

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