Mortgage delinquency rates decreased to 3.8 percent in October, coming close to the 3.7 percent rate from 2019 and marking what experts anticipate to be a continued decline this year.
Mortgages become delinquent when homeowners are at least 30 days overdue on one or more monthly payments.
The delinquency rate, including foreclosures, reached 6.1 percent in October 2020.
This data comes from the latest CoreLogic Loan Performance Report.
In a statement, CoreLogic President and CEO Frank Martell attributed the reduced rate of delinquencies to improved economic security and “disciplined underwriting practices over the past decade.”
According to the Bureau of Labor Statistics, 18.2 million Americans are back at work, and 82 percent of jobs lost in the spring of 2020 were recovered by October.
Serious mortgage delinquencies, which were at 4.1 percent in 2020, dropped to 2.2 percent by October.
Serious delinquencies are 90 or more days past due, including mortgages in forbearance.
The report also showed foreclosure rates dropped slightly to 0.2 percent from 0.3 percent, which is the lowest rate since 1999.
CoreLogic’s chief economist, Frank Nothaft, said there were still about 500,000 more loans in serious delinquency in October than in March 2020, but economic recovery and loan modifications have helped reduce this number from its peak in August.
CoreLogic’s data accounts for only first liens against a property. Rates are measured only against homes that have an outstanding mortgage.
Experts say delinquency rates are generally closely tied to unemployment rates, which is proving true as recent data matches these fluctuations.
Homeowners in forbearance or those with delinquent mortgages are encouraged to reach out to their lenders to discuss options and find a solution.
Meanwhile, market experts are encouraging loan officers to work hard to help their customers find a sustainable solution.
Potential solutions might include loan modification, refinancing, selling the home, or seeking state-specific assistance.
With the housing market remaining strong into this year, mortgage experts say some borrowers have been able to quickly pay off their loans through a refinance or home sale.
Refinancing can provide relief in several ways, including a more affordable monthly payment through rate-and-term adjustments. While mortgage rates remain favorable, experts say it’s still possible to lock in a reasonable rate.
Other homeowners are opting to tap into their equity with a cash-out refinance, while for some, the best option has been to sell their home while demand is strong and home prices are high.