Delinquency rates across the United States soared in April — a change caused by the coronavirus outbreak that, experts warn, could spell trouble for months to come.
According to the latest data from property analytics provider CoreLogic, 6.1 percent of mortgages were in some stage of delinquency in April. The rise, a 2.5 percent increase from the month before, breaks a 27-month streak of monthly declines and signals the troubling effect of the pandemic on the housing market.
“The resurgence of COVID-19 infections across the country has created economic uncertainty and leaves those who are unemployed concerned with their ability to make monthly mortgage payments,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a prepared statement. “The latest forecast from the CoreLogic Home Price Index predicts prices declining in all states through May 2021, erasing some home equity and increasing foreclosure risk.”
The month presented several alarming mortgage trends all at once. The number of homeowners that went from being up-to-date on their mortgages to being 30 days late rose by 3.4 percent — the highest increase since 1999.
Serious delinquencies, in which payments are late by more than 90 days, and foreclosures, in which the home is seized due to the owner’s inability to pay, are still down — 1.2 percent from 1.3 percent and 0.3 percent from 0.4 percent, respectively. New York and New Jersey saw the highest state increases in delinquency rates at 4.7 and 4.6 percent while cities like Miami and Kahului, Hawaii, saw even larger spikes due to their dependence on the tourism industry.
But while temporary bans on foreclosures and federal relief helped protect homeowners in the immediate term, widespread unemployment and economic disruption could create a situation in which many owners fall behind on their mortgage payments and struggle to get back on track for years. According to CoreLogic, the numbers from the coming months will show whether the openings that came later in the spring will help offset the effects seen in April.
“Despite the scale and suddenness of the pandemic, mortgage delinquency has yet to emerge as a major issue, thanks to government COVID-19 relief programs and other housing finance industry efforts,” Frank Martell, president and CEO of CoreLogic, said in a prepared statement. “As the true impact of the economic shutdown during the second quarter of 2020 becomes clearer, we can expect to see a rise delinquencies in the next 12-18 months — especially as forbearance periods under the CARES Act come to a close.”