Mortgage delinquency rate continues to shrink

The delinquency rate for mortgages nationwide has been declining in recent months, giving hope that as we inch closer to the end of the COVID-19 pandemic, that things will get back toward normal when it comes to mortgages.

According to CoreLogic, a California-based property data provider, the national delinquency rate fell to 5.6% in January 2021. While that is a more than 2% increase from January 2020 (3.5%), it’s down from the peak of 7.3% from May 2020 and is the lowest such rate since the onset of the pandemic in April 2020 (6.1%)

While that 7.3% seems rather high – and it is – it still isn’t as crushing as the 12% figure that happened during the late 2009 housing crisis.

Early-stage delinquencies, which are those defined as being between one and two months past due, dropped to 1.3%, which was even lower than the 1.7% recorded in January 2020, before the pandemic even hit. Adverse delinquency rates, defined as between two and three months past due, also dipped to 0.5%, but that was statistically insignificant compared to January 2020 (0.6%).

Where the number is still alarmingly high is in the serious delinquency rate, which is defined as more than three months past due and also includes loans that are in foreclosure. That rate was still 3.8% in January 20021, more than triple what it was in January 2020 (1.2%). However, it has dipped from the August 2020 peak of 4.3%

“As different areas of the economy and the country began reopening in the middle of 2020, the unemployment rate began falling significantly. As more people returned to work and incomes bounced back, homeowners were able to resume making mortgage payments and began to exit forbearance,” Greg McBride, chief financial analyst at, told Forbes.

Rates are declining in conjunction with people getting back to work. In May 2020, at the height of the pandemic, unemployment was peaking at 13.3% In January that fell back to 6.3%. At the state level, there has been a similar drop. However, according to Forbes, some states are still seeing a jump. That’s because those states rely heavily on tourism and hospitality, and that’s the one area that has not really started to rebound during the pandemic just yet.

As such, states like Hawaii, Florida, Nevada, and Alaska are seeing their delinquency rates still at a higher rate than a year prior.

Still, delinquency rates are dropping, and part of that has been because of decisions by the Federal Housing Finance Agency (FHFA) extending the forbearance period for federal-backed mortgages by six months as part of the CARES Act. This has allowed more than two million borrowers to have more time to catchup on their mortgage payments.

It’s important though, for homeowners who are in forbearance or behind on their mortgage payments to start making payments again or to work out modifications to their payment arrangements. This will allow for them to stay out of any delinquent status and for delinquencies as a whole to decline.