TransUnion: Delinquencies Rise, But More Slowly

The 60+ day delinquency rate increased for the 11th consecutive quarter, hitting an all-time national average high of 6.25% in the third quarter, TransUnion reports. The third-quarter rate rose 7.57% from the previous quarter's 5.81% average, which actually represents a deceleration.

For comparison purposes, the delinquency rate from the fourth quarter of 2008 to the first quarter of 2009 saw an increase of almost 14% and the percent change from first-quarter to second-quarter 2009 increased by 11.3%. Year-over-year, mortgage borrower delinquency is up approximately 58% from 3.96%.

The TransUnion data is culled quarterly from approximately 27 million anonymous, randomly sampled, individual credit files, representing approximately 10% of credit-active U.S. consumers.

Delinquency rates in the third quarter continued to be highest in Nevada (14.5%) and Florida (13.3%), while the lowest mortgage delinquency rates were found in North Dakota (1.7%), South Dakota (2.3 %) and Vermont (2.6%).

‘The third quarter provided a mixed bag of economic indicators," says FJ Guarrera, vice president of TransUnion's financial services division. "Many companies' third quarter results are coming in above analysts' expectations. The unemployment rate, like the mortgage delinquency rate, is still climbing, but has decelerated in the number of monthly job losses during the quarter."

Areas showing the greatest percentage growth in delinquency from the previous quarter were Wyoming (+17.9%), Kansas (+17.4%) and North Dakota (+16%). Bright spots for the quarter included the District of Columbia, whose delinquency rate dropped 0.19% from the second quarter.

The average national mortgage debt per borrower dropped 0.36% to $193,121 from the previous quarter's $193,811. On a year-over-year basis, the third-quarter 2009 average represents a 0.43% increase over the third-quarter 2008 average mortgage debt per borrower level of $192,287.

The area with the highest average mortgage debt per borrower was the District of Columbia at $359,788, followed by California at $354,510 and Hawaii at $312,844. The lowest average mortgage debt per borrower was in West Virginia at $97,265.

Quarter over quarter, South Dakota showed the greatest percentage increase in mortgage debt (+2.2%), followed by Montana (+1.96%) and Wyoming (+1.7%). Areas showing the largest percentage drop in average mortgage debt were Nevada (-2.6%), Vermont (-1.97%) and California (-1.4%).

‘While it continues to be a positive sign that the increase in mortgage borrower delinquency rates has slowed for three consecutive quarters, we have to keep things in perspective," Guarerra adds. "Delinquency rates are rising and expected to peak at record levels. Until the housing market can consistently demonstrate several months of home value appreciation and the unemployment rate improves, mortgage delinquency will likely continue to rise."

TransUnion forecasts the delinquency rate will continue to increase, ending up near 7% by year end, Guarerra says.

"TransUnion's 2009 third-quarter national predictions were slightly above actuals, indicating, in part, that a slowdown in delinquency may be on the horizon," Guarerra says. "Until the stabilization of housing prices makes solid traction across the U.S., TransUnion does not see national delinquency rates beginning to fall until the first half of 2010."

With regard to regional forecasts, Nevada is anticipated to experience the highest mortgage delinquency rate by the end of 2009, reaching as high as 16%. North Dakota is expected to continue to exhibit the lowest mortgage delinquency rate by year end (1.7%), with forecasts showing a downward trend by early 2010.

SOURCE: TransUnion

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