Mortgage arrears are falling again as an increase in distressed sales

Despite the many exclusion moratoriums that ended in December 2021, the national exclusion rate remained stable from December to January 2022 and the overall delinquency rate fell to another record low, according to a new CoreLogic loan repayment information report.

While government support and capital accumulation have helped many avoid blockades to date, the US can expect to see a surge in distressed sales throughout the year as some homeowners struggle to regain their position after tolerance.

In January, 3.3% of all home mortgages in the US were in some delinquency stage (30 days or more in arrears, including those excluded), representing a decrease of 2.3 percentage points compared to January 2021, when it was 5.6%. This again marks the lowest overall crime rate recorded at least since January 1999.

To get a complete picture of the mortgage market and loan repayment, CoreLogic examines all stages of delinquency. In January 2022, the delinquency and transition rates and their changes from year to year were as follows:

  • Early stage delinquency (30 to 59 days delay): 1.2%, from 1.3% in January 2021.
  • Unwanted Delinquency (60 to 89 days delay): 0.3%, from 0.5% in January 2021.
  • Serious Delinquency (90 days or more in arrears, including foreclosed loans): 1.8%, up from 3.8% in January 2021 and a high of 4.3% in August 2020.
  • Foreclosure stock percentage (the share of mortgages at some stage of the foreclosure process): 0.2%, from 0.3% in January 2021.
  • Transition rate (the share of mortgages that went from current to 30 days overdue): 0.7%, unchanged from January 2021.

The fall in the overall rate of mortgage arrears in the country in January marked the 10th consecutive month of year-over-year reductions. According to CoreLogic, this trend can be attributed to two well-known factors: the escalation of housing prices and the strong labor market. Housing prices continue to reach new highs, posting 20% increase from year to year in February. In the meantime, the most recent job report shows that the country added an average of 562,000 jobs per month in the first quarter of 2022.

While the foreclosure rate decreased compared to January 2021, the expiration of the moratorium in some states caused an increase in the number of foreclosures from December 2021. However, the foreclosure rate in January 2022 has been stable since December and remains the same. lowest recorded at least since 1999.

“The sharp rise in house prices – a 19% increase in January from a year earlier, according to CoreLogic for the US – has created housing stock and is a major factor in the continuing low level of foreclosures,” he said. CoreLogic economist Frank Nothaft. . “Nevertheless, there are many homeowners who have faced financial difficulties during the pandemic and are coming out of 18 months of tolerance. The U.S. may experience a surge in distressed sales this year as some homeowners struggle to stay informed after a lending and loan modification.

Packed food for the state and the metro

  • In January, all states recorded year-over-year reductions in overall crime rates. The states with the largest declines were: Nevada (down 3.7 percentage points), Hawaii (down 3.5 percentage points) and New Jersey (down 3.2 percentage points). In the other states, including the District of Columbia, the annual delinquency rate falls between 3.1 percentage points and 1.0 percentage point.
  • All U.S. metro areas experienced at least a small annual decline in overall delinquency rates, including those previously affected by the aftermath of Hurricane Ida last fall. The top four subways with the biggest drop were: Odessa, Texas (down 6.3 percentage points). Kahului-Wailuku-Lahaina, Hawaii (decrease of 6.1 percentage points); Laredo, Texas (down 5.9 percentage points); and Lake Charles, Louisiana (down 5.8 percentage points).

Nothaft said: “Employment in the non-agricultural sector increased by 6.7 million workers during 2021, the largest increase in a year, supporting income growth and keeping more families aware of their loans. Nevertheless, parts severely affected by natural disasters have experienced a sharp increase in non-payments. “Serious crime rates in December in the Houma-Thibodaux subway area of ​​southern Louisiana were almost two percentage points higher than just before Hurricane Ida.”

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