However, a more "widespread impact" is on the way, expert warns
Mortgage delinquencies stayed low in March despite the early impacts of the COVID-19 pandemic, according to a new report by CoreLogic.
On a national level, 3.6% of mortgages were in some stage of delinquency in March, a 0.4-perecentage-point decrease from March of 2019. Mortgages defined as delinquent include any that are 30 or more days past due, including those in foreclosure.
The share of mortgages in early-stage delinquency (30 to 59 days past due) was 1.9%, down from 2% year over year. Adverse delinquencies (60-89 days past due) accounted for 0.6%, unchanged from March 2019. Serious delinquencies (90 or more days past due, including loans in foreclosure) accounted for 1.2%, down from 1.4% in March 2019. For the third straight month, the serious delinquency rate remained at its lowest level since June 2000.
The foreclosure inventory rate – representing the share of mortgages at some stage in the foreclosure process – was 0.4% in March, unchanged from a year before. The transition rate – the share of mortgages that transitioned from current to 30 days past due – was 1% in March, up from 0.9% the year prior.
While the March numbers were encouraging, the job market began its tumble the same month, increasing the likelihood that borrowers would fall behind on their mortgages.
“The COVID-19 pandemic has shocked our economic system and led to unprecedented job loss, reducing the ability of affected families to make their monthly mortgage payments,” said Dr. Frank Nothaft, CoreLogic chief economist. “The latest forecast from the CoreLogic Home Price Index shows prices declining in 41 states through April 2021, potentially erasing home equity and increasing foreclosure risk.”
“The first three months of 2020 reflected one of the strongest quarters for US mortgage performance in recent history,” said Frank Martell, president and CEO of CoreLogic. “The buildup in home equity over the past several years, government stimulus programs, and lower borrowing costs have helped cushion homeowners from the initial financial shock of the pandemic and kept widespread delinquencies at bay during the first months of the recession. Looking ahead, we can expect a more widespread impact on US delinquency rates as the economic toll of elevated unemployment and shelter-in-place orders becomes more evident.”
