Mortgage

Jobs, a superb economic system, and mortgage defaults are pushing all the way down to a pandemic low

The March loan default rate was at its lowest level since the pandemic-induced economic upheaval began about a year ago, according to CoreLogic's Loan Performance Insights Report.

The overall default rate of 4.9% was still 1.3 percentage points above the March 2020 default rate of 3.6%, but on a monthly basis the default rate decreased 80 basis points from the 5.7% in February. In January it was 5.6%, in December it was 5.8%.

"Many forces came together in March to achieve the largest one-month improvement in the overall crime rate since the pandemic began," said Frank Nothaft, CoreLogic's chief economist, in a press release. "In addition to continued government support, including stimulus payments and mortgage forbearance programs, the US economy created 770,000 jobs in March, the largest increase since August 2020."

Loans in all delinquency buckets – with the exception of those whose last payment was more than 90 days ago or which are in foreclosure – decreased compared to March 2020.

The badly overdue mortgage rate of 3.5% in March was more than 2.3 percentage points higher than a year ago, when it was 1.2%. Compared to February's 3.7%, it is 20 basis points lower.

Short-term defaults, defined as loans with a default of 30 days to 59 days, showed the largest improvement with 1% in March compared to 1.9% in the previous year. Compared to February there was a 50 basis point improvement of 1.5%.

In another positive development, the rate of current loans that moved to the 30-day or more delay category improved to 0.4% in March, from 0.9% in February and 1% in March 2020.

"Homeowners are catching up on their debts as the economic impact of the pandemic subsides, which is another sign of moving forward on the road to general recovery," said Frank Martell, CEO and President of CoreLogic.

The five states with the highest overall crime rate in March were: Louisiana with 8.1%; Mississippi at 7.4%; New York at 7.1%; Maryland at 6.6%; and New Jersey at 6.5%.

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