The national mortgage delinquency rate will peak in the first quarter of next year before declining to about 5% by the end of 2012, according to a new forecast published by TransUnion, which projects the rate to end this year at just under 6%.
TransUnion predicts that the 60+ day delinquency rate, which has fallen for six consecutive quarters, will peak at about 6.02% in the first quarter of 2012 before declining through the rest of the year.
‘Although house prices and unemployment will likely face continued pressure next year, this forecast calls for gradual improvements in the second half of 2012 to other key variables, like improving credit quality of new originations, consumer confidence and GDP, that will positively influence homeowners' ability and willingness to pay their mortgages,’ says Tim Martin, group vice president of U.S. housing in TransUnion's financial services business unit. ‘If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower's situation, mortgage delinquencies could fall as much as 16 percent in 2012 compared to 2011.’
The expected mortgage delinquency decline in 2012 would follow recent yearly trends, including an expected 7% decrease by the end of this year and a 7% reduction in 2010. This is in contrast to more than 50% year-over-year increases between 2006 and 2009, TransUnion says.
TransUnion is projecting 2012 declines in mortgage delinquencies for 38 states, with the largest percentage declines expected in Arizona (-46.25%), Wisconsin (-45.52%) and Colorado (-40.34%). Twelve states and the District of Columbia are expected to see increases.