Home Mortgage Serious mortgage delinquences poised to bounce from 17-year low – Inman

Serious mortgage delinquences poised to bounce from 17-year low – Inman

by Joshua Garcia

According to data aggregator Black Knight, the number of seriously delinquent homeowners in the U.S. is at its lowest level in nearly 30 years. However, this trend may soon change as early-stage delinquencies continue to rise. In August, 448,000 homeowners were seriously delinquent, meaning they hadn’t paid their mortgage in 90 days or more. This is a 4 percent drop from July and a 25 percent decline from a year ago when approximately 600,000 homeowners were seriously delinquent.

The number of homes in active foreclosure also decreased, falling by 5,000 in August to 215,000. This is the lowest level since March 2022, after foreclosure moratoriums put in place during the pandemic were lifted. However, the number of homeowners in the early stages of delinquency (30 or 60 days behind on payments) has increased for three consecutive months, suggesting that delinquency rates may soon bottom out.

While foreclosure starts were up 21 percent from July to August, they remained 21 percent below pre-pandemic levels at 31,900. The five states with the highest percentage of seriously delinquent borrowers were Mississippi, Louisiana, Alabama, Arkansas, and Georgia.

Overall, the delinquency rate improved from 3.21 percent in July to 3.17 percent in August. This is nearly a full percentage point below the average for August from 2015 through 2019.

The record-high monthly payments for homebuyers in July were also noted in the last Black Knight Mortgage Monitor report. Rising mortgage rates and home prices led to average principal and interest payments of $2,306 per month, a 60 percent increase compared to a year ago.

Despite these challenges, many homeowners have benefited from rising home prices and have built up substantial equity in their homes. This equity cushion may help protect them from foreclosure, as they can sell their homes and walk away with some cash. According to the Black Knight Mortgage Monitor, mortgage borrowers had over $16 trillion in equity in June, with an average of $199,000 per household. Tappable equity, which can be safely cashed out while still leaving a 20 percent equity cushion, was within $434 billion of record 2022 peaks at $10.5 trillion.

It remains to be seen how the real estate market will continue to evolve, but being prepared is essential. Virtual Inman Connect on Nov. 1-2, 2023, and Inman Connect New York on Jan. 23-25, 2024, offer opportunities to learn, network, and gain insights into the future of the industry.

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