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Homeowner delinquency rates are rising from record low levels but aren’t even back to pre-COVID-19 levels yet. This weekend, there has been a lot of discussion on social media surrounding homeowners’ delinquency data. This situation has prompted me to write this article and bring some reality into this discussion because the narrative being pushed is simply not true. It’s not even a clever lie.
The discussion began with a social media post featuring the first chart below, leading many to believe that homeowners are under significant stress. However, the data references Freddie Mac‘s Serious Delinquency levels on multifamily loans. These loans pertain to multifamily mortgages, which are used for commercial properties with five or more units, such as apartment buildings. As always, you have to examine the data closely before concluding anything on the internet.
Notably, the rate of multifamily delinquencies currently stands at under 1%, but it is at levels above the 2008 recession. However, there is a big difference between apartment lending and homeowners who have a 30-year fixed-rate mortgage.
Some people are trying to imply that we have major stress in homeowner data. But as we can see in the chart below, the data clearly identifies these as multifamily loans.
For data on homeowners and their delinquency rates, let’s look at the most recent data from ICE, which shows that we aren’t even back to pre-COVID-19 levels yet. From their First Look report on March 21:
- “The national delinquency rate edged up 5 basis points (bps) to 3.53% in February; that’s up 19 bps from a year ago but still 32 bps below where it was entering the pandemic.
- “FHA mortgages accounted for 90% of the 131K year-over-year rise in the number of delinquencies, despite making up less than 15% of all active mortgages.
- “4,100 homeowners in Los Angeles are now past due as a result of the wildfires, up from 700 in January, with daily performance data suggesting that number could edge higher in March.”
I prefer not to dwell on this misunderstanding, but I want to highlight the importance of reading: the chart that was used to start this confusion specifically references multifamily data.
It’s notable that total credit stress data for loans listed as severe derogatory has not yet recovered to even pre-COVID-19 levels.
Also, the foreclosure and bankruptcy data isn’t even back to pre-COVID-19 levels.
I sincerely appreciate everyone coming to me with questions regarding this topic — there can be a lot of confusing and misleading information circulating, and it’s clear that many individuals share similar concerns. Feel free to contact me on social media or at Logan@hwmedia.com if you want further clarification on the data. Your inquiries are important to me, and I’m here to help.
