Coronavirus-linked business shutdowns have more than doubled the number of Southern California homeowners who are missing mortgage payments.
CoreLogic reports 6% of borrowers in Los Angeles and Orange counties in April were late 30 days or more with their mortgage payments vs. 2.3% delinquent a year earlier. In the Inland Empire, 7.1% of borrowers were at least up 30 days late vs. 3.5% in April 2019.
“Stay at home” orders began throttling the economy in the late winter, forcing many employers to cut jobs. Southern California unemployment was 17% in May.
It’s not just a local surge of tardy payments. Nationally, the 30-day delinquency rate rose after 27 consecutive months of declines to 6.1% of mortgages, the highest since January 2016.
“SoCal is still faring relatively better than some parts of the country where delinquencies spiked to over 10% in April,” said Selma Hepp, CoreLogic’s deputy chief economist. “Nevertheless, the future trajectory of mortgage delinquencies will depend on the trajectory of the COVID-19 crisis. Recent spikes in new cases will have an impact on local economic outcomes and the ability of unemployed to return to work.”
Thanks to historically low mortgage rates and government stimulus efforts, early summer’s homebuying pace in the region is back to near 2019 levels.
Real estate got a boost as mortgage lenders were required by various government actions to let most borrowers impacted by the pandemic delay their mortgage payments. Such “forbearance” programs, so far, have prevented a flood of foreclosures activity.
Hepp added that “the mortgage industry has learned a lot from the last crisis and are being very proactive in ensuring that foreclosure is not the final outcome. Foreclosure is generally the most expensive option for mortgage providers. Also, data suggests that almost 50% of loans in forbearance are now in an extension following initial forbearance.”
A new, experimental Census Bureau poll started during the pandemic gives a mixed picture of how local borrowers are faring more recently.
As of July 7, 10% of L.A.-O.C. homeowners with a mortgage said they skipped or deferred last month’s house payment, an improvement from 12% at the end of April. In the Inland Empire, 22% said they were recently late vs. 14% in April. Nationally, 13% of borrowers said they missed the payment vs. 11% in April.
And things look only slightly better when borrowers were asked about the chances that they’ll make current house payments. The pandemic’s recent resurgence, which led to a pullback of California’s “reopening” may have spooked homeowners.
The census found 9% of L.A.-O.C. borrowers will defer or have “no confidence” they can make their next mortgage payment vs. 21% in Riverside and San Bernardino counties and 7.5% nationally.
via LA Daily News