Understanding Homeowner Delinquency Rates: A Clarification
Recent discussions on social media have sparked a renewed interest in the topic of homeowner delinquency rates. While it is true that these rates are rising from previously record lows, they remain below the levels observed prior to the COVID-19 pandemic. This article aims to correct misconceptions stemming from misleading information, particularly surrounding the data concerning delinquency rates.
The Origin of the Discussion
The conversations were ignited by a social media post featuring a chart that many interpreted as indicative of significant financial stress among homeowners. However, it’s crucial to note that the chart referenced Freddie Mac’s Serious Delinquency rates for multifamily loans, which are associated with commercial properties comprising five or more units, such as apartment complexes.
Clarifying Multifamily vs. Homeowner Loans
Currently, the delinquency rate for multifamily loans is reported to be under 1%. Although this figure is higher than what was recorded during the 2008 recession, it’s essential to recognize that there’s a significant distinction between multifamily mortgages and traditional single-family loans, particularly those with long-term fixed rates such as the 30-year mortgage that most homeowners possess.
Misinterpretations abound, as some are erroneously linking multifamily delinquency data to the stress faced by homeowners. The accompanying chart explicitly highlights that these statistics pertain to multifamily loans, underscoring the need for careful data analysis before drawing conclusions.
Examining Homeowner Delinquency Rates
To gain insight into homeowner delinquency, we can refer to the latest data from ICE, which illustrates that we have yet to return to pre-pandemic delinquency levels. According to ICE’s First Look report from 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.”
This report indicates that FHA mortgages, which account for only 15% of all active mortgages, represented 90% of the increase in delinquencies. Specifically, the number of homeowners in Los Angeles reported as past due has surged due to wildfires—rising from 700 in January to 4,100.
The Bigger Picture: Financial Stress and Recovery
It is important to acknowledge that the overall financial stress indicators for severe derogatory loans have not yet rebounded to levels seen before COVID-19. Similarly, data regarding foreclosures and bankruptcy also reflect this trend, remaining below pre-pandemic figures.
Engagement and Clarification
As these discussions continue, I encourage open dialogue and inquiries regarding this complex topic. Misleading narratives can create unnecessary concern, and I am here to help clarify any confusion. Please feel free to reach out to me via social media or at ex*****@ma**.com for further information or clarification.
