Rising Prices and Increased Equity Help Push Down Foreclosure Rates

Loan Performance Insights Report Highlights: December 2018

By Molly Boesel Consumer Behavior, Mortgage Finance

  • The nation’s overall delinquency rate was 4.1 percent.
  • No state logged an annual gain in its overall or serious delinquency rate, or foreclosure rate, in December.

In December 2018, 4.1 percent of home mortgages were in some stage of delinquency, down from 5.3 percent a year earlier and the lowest for the month of December in at least 18 years[1], according to the latest CoreLogic Loan Performance Insights Report. The measure, also known as the overall delinquency rate, includes all home loans 30 days or more past due, including those in foreclosure. For the month of December historically, the share of delinquent mortgages peaked in 2009, at 11.6 percent. Since March 2018 the overall delinquency rate each month has been lower than during the  pre-crisis period of 2000 through 2006, when the rate averaged 4.7 percent.

Current to 30 Day Transition Rate

The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.5 percent in December 2018, down from 2.1 percent in December 2017. Since August 2018 the serious delinquency rate has stood at 1.5 percent, matching the average for the 2000 – 2006 pre-crisis period.

The foreclosure inventory rate – meaning the share of mortgages in some stage of the foreclosure process – was 0.4 percent in December 2018, down from 0.6 percent a year earlier. December’s foreclosure rate was the lowest for that month in at least 18 years and was below the average pre-crisis level of 0.6 percent. Rising home prices have led to record amounts of home equity, reducing the risk of foreclosure.

The share of mortgages that were 30 to 59 days past due – considered early-stage delinquencies – was 2 percent in December 2018, down from 2.4 percent in December 2017. The share of mortgages 60 to 89 days past due was 0.7 percent in December 2018, down from 0.8 percent in December 2017.

In addition to delinquency rates, CoreLogic tracks the rate at which mortgages transition from one stage of delinquency to the next, such as going from current to 30 days past due. Figure 1 shows that in December 2018 the current- to 30-day transition rate remained well below levels during the housing crisis. The December current- to 30-day rate was 0.9 percent, down from 1.2 percent a year earlier. The 30- to 60-day transition rate was 17 percent in December,  down from 18.9 percent in December 2017, while the 60- to 90-day transition rate was 27.5 percent last December, down from 38 percent a year earlier.

States with the Highest and Lowest Rate of Mortgage

Figure 2 shows the states with the highest and lowest share of mortgages 30 days or more delinquent. In December 2018, that rate was highest in Mississippi at 8 percent and lowest in Colorado at 1.8 percent. No states posted an annual increase in the 30-plus-day delinquency rate.

Percentage of Mortgage

Figure 3 shows the 30-plus-day past-due rate for December 2018 for the 10 largest metropolitan areas.[2] The New York metro had the highest rate at 5.4 percent. Miami, with the second-highest rate at 5.3 percent, saw a sharp decrease in the overall delinquency rate, falling from 11.6 percent in December 2017. San Francisco had the lowest 30-plus-day delinquency rate in December 2018 at 1.4 percent. Houston also saw a large year-over-year decrease, from 9.8 percent in December 2017 to 5.2 percent in December 2018. Outside of the largest 10, six metro areas posted an annual increase in their overall delinquency rate – five in the hurricane-ravaged parts of the Southeast and one in Northern California’s Chico metro area, home of last year’s devastating “Camp Fire.”

[1] Metro areas used in this report are the ten most populous Core-Based Statistical Areas.

[2] The data in this report date back to January 2000.

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