Delinquencies Hit Lowest Rate Since January 1999

Delinquencies dropped again in January to their lowest rate since at least January 1999 thanks to home price appreciation and the strong jobs market, according to CoreLogic’s monthly Loan Performance Insights Report for January 2022.

Only 3.3% of all U.S. mortgages were in some stage of delinquency, a 2.3% drop YOY. January marked the tenth straight month of annual declines.

Early-stage delinquencies (30 to 59 days past due) accounted for 1.2% of mortgages, down from 1.3% the year prior. Adverse delinquencies (60 to 89 days) were down from 0.5% in January 2021 to 0.3%. 

Serious delinquencies (90 days, including loans in foreclosure) were down from 3.8% to 1.8%. Serious delinquencies hit a record high of 4.3% in August 2020.

CoreLogic attributes the decline to the strong jobs market and home price appreciation.

“The large rise in home prices — up 19% in January from one year earlier, according to CoreLogic indexes for the U.S. — has built home equity and is an important factor in the continuing low level of foreclosures,” said Dr. Frank Nothaft, chief economist of CoreLogic. 

“Nonetheless, there are many homeowners that have faced financial hardships during the pandemic and are emerging from 18 months of forbearance. The U.S. may experience an uptick in distressed sales this year as some owners struggle to remain current after forbearance and loan modification.”

In February, foreclosures rose by 11% from January and 129% YOY, ATTOM Data Solutions reported.

“February foreclosure activity looks a lot like what we can expect to see for at least the next six months – double-digit month-over-month growth, and triple-digit year-over-year increases,” said Rick Sharga, executive vice president at RealtyTrac, an ATTOM company.

“This isn’t an indication of economic turmoil, or of weakness in the housing market; it’s simply the gradual return to normal levels of foreclosure activity after two years of artificially low numbers due to government and industry efforts to protect financially-impacted homeowners from defaulting.”