The national mortgage delinquency rate was down by nearly a quarter in the June-September period compared to the third quarter of 2012, marking the seventh straight quarter in which mortgage delinquencies declined. TransUnion said today that delinquencies of 60 days or more were down 23.3 percent since the third quarter of 2012 to a national rate of 4.09 percent. The rate in third quarter of 2012 was 5.33 percent and it was 4.32 in the second quarter of 2013.
The improvement was indeed national with every state and the District of Columbia seeing a drop in its rate on an annual basis. Five states -- California, Arizona, Nevada, Colorado and Utah -- experienced 30%+ declines in their mortgage delinquency rate. Three states -- California, Florida and Nevada -- had double-digit percentage drops in the last quarter. None-the-less both Florida and Nevada continue to have rates well above the national average at 9.11 percent and 7.28 percent respectively.
"This isn't a sample data set," said Tim Martin, group vice president of U.S Housing for TransUnion's financial services business unit. "We looked at all 52 million installment-based mortgages in the U.S. and the trend is clear -- the percentage of borrowers willing and able to make their mortgage payments continues to improve. The overall delinquency rate is still high relative to 'normal,' but a 23% year over year improvement is great news for homeowners and their lenders."
The company expects that the downward trend in delinquencies will continue for the remainder of the year. While the forecast could change if there are unanticipated shocks affecting unemployment, real estate values, income or other economic factors, TransUnion is projecting the delinquency rate will be just under 4 percent by the end of 2013.
Non-prime borrowers, those with a credit score below 700, continue to represent a smaller portion of all mortgage loans, down 50 percent from 2007. Non-prime borrowers constituted 5.82 percent of all new mortgage originations in Q2 of 2013 compared to 12.69 percent in the second quarter of 2008. TransUnion reports mortgage data one quarter in arrears to ensure all originations have been recorded.
The company reported that there was 2.34 million new mortgage accounts in the second quarter of 2013 (indicating mortgage originations) compared to 2.09 million a year earlier and a major increase from that quarter in 2010 when only 1.32 million new accounts were opened. TransUnion now maintains 52.31 million mortgage accounts compared to 54.23 accounts a year earlier and 63.14 million in the third quarter of 2008 prior to the housing crisis.
"New mortgage originations showed good growth through the second quarter of this year, largely the result of increased refinance transactions driven by low rates and increasing home prices," said Martin. "However, mortgage rates started to increase right around Memorial Day, and when the data come out next quarter, we expect it to show that new originations are decreasing as a result."
The data provided are gathered from TransUnion's proprietary Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.
