With the biggest hit taking place in the early months of the pandemic, the mortgage outlook continues to improve. Overall delinquency rates dropped annually for the first time since March 2020.

According to the latest report from property analytics provider CoreLogic released on Tuesday, 4.7 percent of mortgages in the U.S. were in some state of delinquency in April, whether a few late payments or full-on foreclosure.

This number is a significant drop from the 6.1 percent observed in April 2020 and 4.9 percent observed last month. It is the lowest overall delinquency rate observed in a year.

CoreLogic

“The sharp rebound in the economy, as well as a potent combination of government fiscal and regulatory help, is fueling unprecedented demand for residential housing and enabling people to buy and stay in their homes,” Frank Martell, president and CEO of CoreLogic, said in a prepared statement. “The drop in delinquency rates is a further manifestation of the benefits of these tail winds. Barring an unforeseen change, we expect rates to continue to fall and home prices rise over the next 12-to-18 months.”

At the start of the pandemic, there was much talk that widespread shutdowns and unemployment would take its toll on the mortgage and housing markets. While anti-eviction and anti-foreclosure orders prevented a homelessness crisis, stacked missed payments create a financial hole that’s difficult to get out of. In April and May, we started to see these reverberations with some of the highest delinquency rates observed in a decade.

CoreLogic

But as pointed out by CoreLogic analysts, the recovery is well on the horizon. Early-stage delinquencies are down to 1 percent from 4.2 percent in April 2020 while foreclosure rates are unchanged at 0.3 percent.

One number that indicates a problem is the serious delinquency rates, or mortgage payments that are missed by more than 90 days. At 3.3 percent, they are up 1.2 percent from April 2020 and indicate the financial hole that can be created when a mortgage payment is missed and next month’s income needs to cover not one but two payments.

“Natural hazard events and job loss in the oil and gas industry during the past year continue to affect local delinquency rates, despite a general decline in delinquency rates in many urban areas,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a prepared statement. “Of all metros, Odessa and Midland, Texas, had the largest one-year jumps in serious delinquency rates, followed by Lake Charles, Louisiana, which was hit hard by Hurricanes Laura and Delta in 2020.”

Email Veronika Bondarenko

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