The national mortgage delinquency rate declined slightly from 5.49% in the second quarter to 5.41% in third quarter, according to new data from Chicago-based TransUnion. This marks the third consecutive quarter where the delinquency rate declined. On a year-over-year basis, the mortgage delinquency rate has declined nearly 8% from 5.88% in the third quarter of 2011.
‘Continued declines in mortgage delinquency rates are a welcome sign and reflect that relatively more homeowners are able and willing to make their mortgage payments each month,’ says Tim Martin, group vice president of U.S. housing in TransUnion's financial services business unit. ‘However, we still have a long way to go to reach more 'normal' conditions of a delinquency rate in the one percent to two percent range for the U.S. average.’
TransUnion found that 22 states experienced improvement in their mortgage delinquency rates from last quarter, while 42 states experienced improvement from last year. At a more granular level, 49% of metropolitan areas saw quarterly improvement in their mortgage delinquency rates in third quarter, which TransUnion considers to be a ‘significant departure’ from the previous two quarters, when 76% (second quarter) and 73% (first quarter) of metro areas experienced improvement.
Arizona and California, two of the states most negatively impacted by the mortgage crisis, experienced the greatest improvement in mortgage delinquency rates on a year-over-year basis. Since the third quarter of 2011, Arizona's has dropped nearly 25% from 7.46% to 5.62%. California has dropped almost 24% in that same time, from 7.29% to 5.56%. Currently, only two states remain with double-digit delinquencies: Florida at 13.09% and Nevada at 10.93%, although both of those states showed improvement year over year.
The District of Columbia experienced the largest year-over-year increase in mortgage delinquency rate, up over 11% from 5.47% to 6.10%. Eight states also experienced year-over-year increases with New Jersey registering both the highest overall rate of the group at 8.33% and the largest increase, up nearly 10% year over year.
TransUnion expects the mortgage delinquency rate to fall again in the fourth quarter, but only slightly.
‘It's generally tough to expect improvement in delinquency rates in the fourth quarter of the year given the extra demands on household income that many experience during the holiday season,’ says Martin. ‘However, we saw some improvement in the housing market in the third quarter with regard to house prices, home sales and increased refinance activity, and we believe we will start to see these numbers reflected in improved mortgage delinquency next quarter. As such, we forecast the year-end delinquency rate to improve to something in the 5.25%-5.35% range.’