CoreLogic says its research shows that low mortgage rates are helping to keep elevated delinquencies in check.
“Our analysis of CoreLogic public records shows that more than one-half of all home mortgage loans created since the onset of the pandemic have been no-cash-out refinance," Frank Nothaft, chief economist at CoreLogic, told Mortgage News Daily. "By reducing their mortgage rate with these types of loans, homeowners have been lowering both their interest expense and risk of delinquency."
With the COVID-19 pandemic raging on and the economy still struggling, homeowners are looking at ways to get help with their mortgages. Foreclosure moratoriums are still in place, and many lenders are offering additional assistance to struggling homeowners.
CoreLogic said the rate of non-current loans is significantly higher this year due to the pandemic and its impact on the economy. The national delinquency rate, or the amount of loans that are 30 or more days past due or are in foreclosure, stands at 6.3%, up from 3.8% one year ago, CoreLogic’s latest Loan Performance Report shows.
“Although delinquencies remain high, it’s clear the economy has passed an initial stress test,” said Frank Martell, president and CEO of CoreLogic. “High home equity balances and structural protections put in place as a result of the Great Recession contributed to surviving the test. Housing demand remains strong, and rates low, which provides optimism that the housing market will continue to be a bright spot in this COVID-ravaged economy.”
Meanwhile the foreclosure inventory rate, which is the share of mortgages that are currently in foreclosure, is at its lowest since January 1999. That’s because the U.S. Congress earlier this year issued a foreclosure moratorium as part of the CARES Act to aid homeowners who’re struggling to pay their mortgages.
Still, every single U.S. state saw its delinquency rate increase in September compared to a year earlier. States that rely heavily on tourism have been hit hardest, such as Nevada, Hawaii, and Florida, CoreLogic’s report shows.