National Mortgage Delinquency Rate Declines: TransUnion

The mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) continued its robust decline, falling for the 11^th straight quarter to 3.36% at the end of Q3 2014, according to TransUnion’s latest mortgage report. The mortgage delinquency rate has declined nearly 17% in the last year (down from 4.03% in Q3 2013).

Some of the biggest mortgage delinquency rate declines occurred in the nation’s largest markets. Between Q3 2013 and Q3 2014, Miami (-31.6%), San Francisco (-28.6), Phoenix (-27.1%) and Los Angeles (-24.2%) continued to experience major improvements in delinquency. Of the largest markets, only two did not have double digit declines: New York (-9.9%) and Philadelphia (-9.4%).

“While mortgage delinquency rates remain elevated relative to historic norms, they are steadily improving,” said Joe Mellman, vice president of mortgage in TransUnion’s financial services business unit. “New mortgage cohorts over the past several years have been squeaky clean from a risk perspective. This fact, combined with the continuing clearance of the foreclosure backlog and the gradual but steady rise in home values, serves to drive the ongoing trend toward lower mortgage delinquency rates overall.”

The mortgage delinquency rates for Los Angeles (2.53%) and Phoenix (2.47%) are now nearly one full percentage point below the national average of 3.36%. For much of 2009 and 2010, these areas had delinquency rates that exceeded 10%, whereas the national average never breached the 7% mark. “It’s especially heartening to see major declines in areas that were hardest hit by the mortgage crisis,” continued Mellman. “In part, it speaks to the broader rebound in the economy. As unemployment continues its decline and home values improve, consumers have both greater wherewithal and motivation to stay current on their housing payments.”

On a quarterly basis, all 50 states and the District of Columbia experienced declines in their mortgage delinquency rates between Q3 2013 and Q3 2014. Nevada (-29.0%), Florida (-28.8%) and California (-26.5%) saw the biggest declines. “This is another positive as declines are occurring nationwide and not only in isolated geographic pockets,” said Mellman.

TransUnion data indicate that declines in mortgage delinquency rates took place among all age groups, with the youngest age groups – under 30 and 30-39 – seeing the biggest yearly declines of -26.7% and -22.4%, respectively.

TransUnion recorded 53.2 million mortgage accounts as of Q3 2014, up from 52.3 million in Q3 2013. However, there are nearly 10 million fewer accounts as compared to Q3 2008 (63.1 million).

Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), new account originations dropped 38.3% from 2.3 million in Q2 2013 to 1.4 million in Q2 2014. The share of non-prime originations did rise in the last year, increasing from 13.2% in Q2 2013 to 16.9% in Q2 2014. “Originations once again lagged, largely due to a decline in refinancing activity. As home values continue to increase and lenders eventually ease their underwriting standards—which still remain quite conservative—we expect originations to increase,” said Mellman.

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans.

Q3 2014 Mortgage Statistics – Delinquency Rates

Quarter over Quarter