And this is just for April, the very beginning of the Pandemic’s impact on housing.
OK, it’s actually worse. Mortgages that are in forbearance and have not missed a payment before going into forbearance don’t count as delinquent. They’re reported as “current.” And 8.2% of all mortgages in the US – or 4.1 million loans – are currently in forbearance, according to the Mortgage Bankers Association. But if they did not miss a payment before entering forbearance, they don’t count in the suddenly spiking delinquency data.
The onslaught of delinquencies came suddenly in April, according to CoreLogic, a property data and analytics company (owner of the Case-Shiller Home Price Index), which released its monthly Loan Performance Insights today. And it came after 27 months in a row of declining delinquency rates. These delinquency rates move in stages – and the early stages are now getting hit:
Transition from “Current” to 30-days past due: In April, the share of all mortgages that were past due, but less than 30 days, soared to 3.4% of all mortgages, the highest in the data going back to 1999. This was up from 0.7% in April last year. During the Housing Bust, this rate peaked in November 2008 at 2% (chart via CoreLogic)….
An indicator that presaged the Housing Crisis is flashing red again
New mortgage delinquencies hit a record in April as people couldn't pay. Many Americans did enter forbearance programs, but will they be able to pay in August/Sept/Oct?t.co/ect6mmNXLr by @andrewvandam pic.twitter.com/Ee1ifh6KJr
— Heather Long (@byHeatherLong) July 14, 2020
— Invariant Perspective (@InvariantPersp1) July 15, 2020
Levered to the gills.
Restaurants added an insane amount of debt recently.
Median debt/assets is now close to 70%.
More than doubling in 2 years.
The problem is:
Free cash flow is in free fall.
Down 50% YoY!
The macro environment is severely impaired. pic.twitter.com/coVZszRkH2
— Otavio (Tavi) Costa (@TaviCosta) July 15, 2020
FED'S HARKER: ECONOMIC RECOVERY WILL BE SLOW AND LIKELY TAKE THE SHAPE OF A NIKE SWOOSH.
— First Squawk (@FirstSquawk) July 15, 2020
GOLDMAN SACHS PREPARING FOR PROLONGED ECONOMIC CHALLENGES
— *Walter Bloomberg (@DeItaOne) July 15, 2020
The banks have a problem and they know it.
They may be better capitalized than they were in 2007 but that doesn't account for the bigger size of hidden risks embedded in the system (VIE).
There is never just one cockroach.
— Jack Scott (@JackPScott) July 15, 2020
The number of applications for unemployment benefits is likely to top 1 million for the 17th straight week, underscoring the difficulty the U.S. is experiencing as the economy tries to recover from the coronavirus.
U.S. job gains are set to slow sharply or even reverse in July after a resurgent coronavirus and new wave of shutdowns stymied the economic rebound.