Serious mortgage delinquencies are up 55% from pre-pandemic levels
The number of borrowers who are three or more behind on their mortgage payments has increased by 55% from pre-pandemic levels, according to new data from mortgage technology and data provider Black Knight. While there were around 400,000 serious crimes left before the pandemic, today there are around 640,000, according to the data. And while that sounds very concerning, the pros say it’s not what it seems. (You can see the lowest mortgage rates you could qualify for here.)
Indeed, while data from Black Knight indicates that the number of serious crimes has increased since before the pandemic, this particular figure does not paint a complete picture of what is happening in the housing market more broadly, says Jacob Channel. , senior economic analyst at LendingTree.
Although serious crime has been on the rise for a few years, it was very low before the pandemic anyway, according to the data. And Black Knight reports that they’ve fallen 6-12% in each of the past 14 months. When you get down to the nitty-gritty of this data, you can see that the serious delinquency rate for FHA loans was almost five times higher than the serious delinquency rate for conventional loans, according to data from CoreLogic. “Homeowners with FHA loans are more likely to be low-to-moderate income workers, and the pandemic has had a greater impact on these homeowners than on those with conventional loans.”
Moreover, the national delinquency rate – which even takes into account someone who is just one month overdue – fell in April to 2.80%, marking a new high for the second month in a row, reveals Black Knight . As CoreLogic concluded in February: “The country’s overall mortgage default rates have improved significantly over the past year…Lowering local unemployment rates, a rapid increase in home prices and housing demand helped reduce the overall failure rate.
And although the number of borrowers with just one overdue payment increased by 7.9% in April, this was offset by the fact that the number of borrowers with three or more overdue payments fell by 8%. . Additionally, foreclosure starts — the process of initiating a foreclosure after 120 days of past due payments — fell 12% from March.
“The overall mortgage delinquency rate has fallen to a new record and not only that, [foreclosure starts] actually fell 12% from February to March, the biggest month-over-month drop in 20 years,” Channel explains. And the beginnings of seizures are below pre-pandemic levels, which means that while a relatively large number of people are serious offenders, many are not actively seized.
What does all this mean for the housing market?
Ultimately, despite a few hiccups here and there, most data points to the housing market doing quite well, the pros say. The majority of people seem able to meet their mortgage payments, and that’s what economists and real estate professionals told MarketWatch Picks about today’s housing market. “While high rates and prices may push some people out of the market and eventually start to put more noticeable downward pressure on demand, there’s not a lot of evidence to suggest we’re going to see a lot of buyers. suddenly start falling behind or defaulting on their loans in the near future,” Channel says.