TransUnion: Mortgage Delinquencies Drop for Second Straight Quarter
By: Carrie Bay
The national mortgage loan delinquency rate – measuring the ratio of borrowers 60 or more days behind on their home loan payments – fell again in the second quarter of 2010, suggesting the credit conditions in the housing sector have begun to stabilize, according to TransUnion.
Data released Tuesday by the Chicago-based credit reporting agency show that the national delinquency rate dropped to 6.67 percent in Q2. That’s down from 6.77 percent during the previous three-month period, which marked the first time in 12 quarters that TransUnion recorded a decline in mortgage delinquencies.
The second quarter delinquency rate is up 14.8 percent from the same period last year, however, when 5.81 percent of mortgage borrowers were at least two months behind on their payments.
According to TransUnion, mortgage delinquency rates in the second quarter of 2010 continued to be highest in Nevada (15.86 percent) and Florida (15.02 percent). The lowest mortgage delinquency rates can be found in North Dakota (1.61 percent), South Dakota (2.23 percent), and Nebraska (2.61 percent).
The company reports that 12 states showed increases in delinquency from the previous quarter, with Rhode Island (+4.63 percent), New Mexico (+4.45 percent), and Washington (+3.39 percent) leading the pack.
Measures of later-stage mortgage delinquency, such as the ratio of borrowers 90 or 120 or more days past due, provide additional positive news. For the first time since before the recession began in 2007, TransUnion says these later-state delinquency rates have now both declined nationally from where they were last quarter.
“The second quarter decline in mortgage delinquency gives further credence to the notion that the credit market is stabilizing,” said FJ Guarrera, a TransUnion VP. “Although this is good news for the consumer, the economy is still burdened by high unemployment, upcoming ARM resets, and a glut of foreclosures.”
TransUnion says it expects 60-day mortgage delinquencies to continue to drift downward through the remainder of 2010, possibly nearing 6.4 percent nationally by the end of the year. But the company notes that its forecast is based on the assumption that both real estate values and the unemployment picture will improve gradually.
“This forecast would certainly change if there are unanticipated shocks to the economy affecting the recovery in the housing market,” Guarrera said.
With regard to regional outlooks, Florida is expected to experience the highest mortgage delinquency rate by the end of 2010, reaching as high as 16.2 percent, according to TransUnion. The company says North Dakota is expected to exhibit the lowest mortgage delinquency by year-end with a rate of 1.5 percent.
TransUnion’s quarterly delinquency report is based on data from approximately 27 million randomly sampled, individual credit files, representing approximately 10 percent of credit-active U.S. consumers.
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