Mortgage delinquency rates – what’s happening?

Walsh pointed to low unemployment and the historical correlation with unemployment and delinquency rates, as well as higher labor force participation, wage growth and accumulated home equity – including support for homeowners through post-forbearance loan workouts – as the reasons for the record low delinquency rates.

She said there had been a “huge rebound in a pretty short span of time”, describing the low delinquency rates relative to pre-pandemic levels as “remarkable”.  

The strength of the data was particularly significant as the country had not had to face a pandemic like COVID before, while stressing that the potential negative effects of the Omicron variant had been “muted” during the last quarter.

She said: “Historically, we’ve been conducting the national delinquency survey since 1979, so we have this huge 40-year history of delinquency rate. In terms of the overall delinquency, we’re certainly doing better in terms of the average delinquency rate going back to 1979.

“What we usually see with natural disasters is that it takes about three quarters or so to get back to pre-disaster level, so it’s hard to know what to expect, but certainly the strong job market helped, and based on the results we were getting on a monthly basis through a forbearance survey, it wasn’t a complete surprise to see that drop off.