Mortgage Loan Delinquency Rates Hit Lowest Level Since 2009

The national mortgage delinquency rate (60+ days past due) declined in the first quarter of 2012 to 5.78 percent, according to TransUnion. This improvement ends 2 quarters of increases that began in the third quarter of 2011.

Prior to Q3 2011, 60-day mortgage delinquencies rates had dropped for six consecutive quarters. This latest quarter brings the mortgage delinquency rate to its lowest point since Q1 2009.

The delinquency rate in the first quarter of 2012 was 3.83 percent lower than in the fourth quarter of 2011 and 6.62 percent lower than the first quarter of 2011.

“To see that quarter over quarter, and year over year, more homeowners were able to make their mortgage payments is certainly welcome news,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.  “Before this, we saw two quarters of delinquency increases and while we are still about three-times above the pre-recession norm, this should mark the start of consistent improvement each quarter.”

House prices continue to face downward pressure and unemployment remains high, but many see the economic environment beginning to show modest improvement. TransUnion said its forecast predicts mortgage delinquency rates to drift downward in 2012 as more homeowners are able to repay their mortgage debt obligations.

“We have seen increased traction of refinance activity related to HARP 2.0, a program that makes it easier for homeowners with negative equity in their home to refinance,” said Martin. “Going forward, as these homeowners take advantage of the historic low mortgage interest rates, and perhaps lower their monthly payment in the process, it may have some positive impact on the overall delinquency rate starting later this year.”

TransUnion said its forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and real estate values. The forecast would change if there are unanticipated shocks to the economy affecting recovery in the housing market or if home prices fall more than expected.