Mortgage delinquency rates ticked higher in July compared with the previous month, and given that hurricane season picks up in late summer and early fall, that could drive them higher through 2024, CoreLogic said.
Approximately 2.7% of outstanding mortgages were 30 days or more late on their payment or in foreclosure. This was up from 2.6% in June but down from 3% for July 2022.
The home equity gains of recent years are likely going to keep borrowers who moved into the later stages of the delinquency timeline from entering the foreclosure process, said Molly Boesel, principal economist for CoreLogic.
That equity opens various options for these borrowers, including the opportunity to sell the property for more than what is owed.
"And while home equity gains have slowed from their former rapid pace, CoreLogic projects that home price growth will pick up over the next year," Boesel pointed out. "Borrowers should continue to build equity over the coming months, even if at a more moderate rate."
Earlier, CoreLogic reported home prices grew 2.5% in July on an annual basis, following two consecutive months of 1.6% gains.
"Nevertheless, the projection of prolonged higher mortgage rates has dampened price forecasts over the next year, particularly in less-affordable markets," CoreLogic Chief Economist Selma Hepp said at the time.
First American Financial recently released its new home price index, which has data through August. Prices rose 0.7% between July and August on an unadjusted basis and by 5.6% from August 2022.
Further bearing out how higher values impact foreclosures, all buckets were unchanged on a year-over-year basis except for the seriously delinquent category — 90 days or more late on the scheduled payment or already in the process. Its share declined by 0.3 percentage points from July 2022 to 1%, the CoreLogic data said.
When it comes to hurricanes, events like last year's Ian, show the effect on delinquency rates. Jobs are on hold either short-term or for longer periods and these borrowers are eligible for forbearances.
Delinquencies in Florida increased by 8,700 units for December 2022 because of Ian, Black Knight reported.
