New IBHS, CoreLogic Study Shows Modern Building Codes Cut Post-Hurricane Mortgage Delinquency Rates in Half

Study finds borrowers in homes built after 2007 experience lowest default rates.

A new report released today by the Insurance Institute of Business & Home Safety (IBHS) and CoreLogic® found modern building codes decreased the expected spike in post-hurricane mortgage delinquency rates by about 50 percent. Borrowers in homes built to modern building codes — which emerged in 2002 — were least likely to experience mortgage delinquency following a hurricane when all other factors were equal.

The study explored the impact of landfalling hurricanes on mortgage delinquency rates and how more resilient modern building codes and their adoption impact local housing markets.

“When building codes are strong and effectively enforced, we see less structural damage, and families have a better chance of staying in their homes with less financial uncertainty in the aftermath of a damaging hurricanes,” said Dr. Ian Giammanco, managing director of codes and standards at IBHS. “This shows not only do modern building codes and the system of enforcement reduce damage, but they also strengthen the resilience of the financial sector, helping to keep communities intact.”

The modern building code era is marked by the inclusion of more stringent wind design requirements in 2000, one of the most critical milestones in building code advancement to reduce damage from windstorms.

The study shows borrowers in the modern building code groups default at a statistically significant lower rate following a hurricane event. By comparison, a model for the period prior to the event shows newer homes built under modern codes actually default at a significantly higher rate than older homes within the pre-modern code era groups.

“Modern building codes provide stability when weather-related disasters occur,” said Tanya Havlicek, principal, science and analytics at CoreLogic. “As we seek adaptive solutions to the growing impacts of climate change, modern building codes are a proven mitigation tool to reduce the damage, disruption and displacement that comes with severe weather.”

The report is publicly available at https://www.corelogic.com/intelligence/building-codes-impact-mortgage-delinquency/. 

About the Insurance Institute for Business & Home Safety (IBHS)

The IBHS mission is to conduct objective, scientific research to identify and promote effective actions that strengthen homes, businesses and communities against natural disasters and other causes of loss. Learn more about IBHS at ibhs.org.

About CoreLogic

CoreLogic is a leading provider of property insights and innovative solutions, working to transform the property industry by putting people first. Using its network, scale, connectivity and technology, CoreLogic delivers faster, smarter, more human-centered experiences, that build better relationships, strengthen businesses and ultimately create a more resilient society. For more information, visit www.corelogic.com.