52 Million Mortgages, Fewer Delinquencies, Higher Credit Scores

Thernnational mortgage delinquency rate was down by nearly a quarter in the June-Septemberrnperiod compared to the third quarter of 2012, marking the seventh straightrnquarter in which mortgage delinquencies declined.  TransUnion said today that delinquencies of 60rndays or more were down 23.3 percent since the third quarter of 2012 to arnnational rate of 4.09 percent.   The rate in third quarter of 2012 was 5.33 percentrnand it was 4.32 in the second quarter of 2013. rn</p

Thernimprovement was indeed national with every state and the District of Columbia seeingrna drop in its rate on an annual basis.  Five states — California, Arizona, Nevada, Colorado andrnUtah — experienced 30%+ declines in their mortgage delinquency rate. Threernstates — California, Florida and Nevada — had double-digit percentage dropsrnin the last quarter. None-the-less both Florida and Nevada continue to havernrates well above the national average at 9.11 percent and 7.28 percentrnrespectively.</p

“This isn’t a sample datarnset,” said Tim Martin, group vice president of U.S Housing forrnTransUnion’s financial services business unit. “We looked at all 52rnmillion installment-based mortgages in the U.S. and the trend is clear — thernpercentage of borrowers willing and able to make their mortgage paymentsrncontinues to improve. The overall delinquency rate is still high relativernto ‘normal,’ but a 23% year over year improvement is great news for homeownersrnand their lenders.”</p

The company expects that therndownward trend in delinquencies will continue for the remainder of the year.  While the forecast could change if there are unanticipatedrnshocks affecting unemployment, real estate values, income or other economicrnfactors, TransUnion is projecting the delinquency rate will be just  under 4 percent by the end of 2013. </p

Non-prime borrowers, those with arncredit score below 700, continue to represent a smaller portion of all mortgagernloans, down 50 percent from 2007. rnNon-prime borrowers constituted 5.82 percent of all new mortgage originationsrnin Q2 of 2013 compared to 12.69 percent in the second quarter of 2008.  TransUnion reports mortgage data one quarterrnin arrears to ensure all originations have been recorded.</p

The company reported that there wasrn2.34 million new mortgage accounts in the second quarter of 2013 (indicating mortgagernoriginations) compared to 2.09 million a year earlier and a major increase fromrnthat quarter in 2010 when only 1.32 million new accounts were opened.rnTransUnion now maintains 52.31 million mortgage accounts compared to 54.23 accountsrna year earlier and 63.14 million in the third quarter of 2008 prior to thernhousing crisis.</p

“New mortgage originationsrnshowed good growth through the second quarter of this year, largely the resultrnof increased refinance transactions driven by low rates and increasing homernprices,” said Martin. “However, mortgage rates started tornincrease right around Memorial Day, and when the data come out next quarter, wernexpect it to show that new originations are decreasing as a result.”  </p

The data provided are gathered fromrnTransUnion’s proprietary Industry Insights Report, a quarterly overviewrnsummarizing data, trends and perspectives on the U.S. consumer lendingrnindustry. The report is based on anonymized credit data from virtually everyrncredit-active consumer in the United States.

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