TransUnion: National Mortgage Loan Delinquencies Continue to Improve in First Quarter of 2011

The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) decreased for the fifth consecutive quarter, dropping to 6.19 percent at the end of the first quarter in 2011. This is according to TransUnion and 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.

As housing prices declined further during the first quarter of 2011, mortgage delinquencies were expected to remain flat or slow in their decline. However, the Q1 2011 TransUnion data released today shows the mortgage delinquency rate improved more in this quarter (down 3.4 percent vs. Q4 2010) than it improved last quarter (down only 0.5 percent from Q3 2010).

“Decreasing home prices can be risky because they exert upward pressure on mortgage delinquency rates. The fact that mortgage delinquency continues to decline despite this situation demonstrates that today’s borrowers are less risky,” said Tim Martin, group vice president of the U.S. Housing Market in TransUnion’s financial services business unit. “While many homeowners still face pressure to make ends meet, they have lived in their homes for a long time and have diligently been paying their mortgage each month. These are borrowers that have roots in their residential neighborhoods and may already have substantial equity invested.”

TransUnion’s 90-day Real Estate Inquiry Index, an index that measures the demand for real estate credit, also continued its decline during the first quarter of 2011 to 26.04, dropping to the second lowest value since the index was benchmarked in 2000.

“Until consumer confidence improves, and housing prices stabilize, demand for real estate credit will continue to remain sluggish,” said Martin.

Mortgage Delinquency Forecast

TransUnion forecasts that mortgage borrower delinquency rates will continue to drift downward for the remainder of 2011, as improving economic conditions and tighter lending standards offset the impact of falling home prices.

TransUnion’s forecast is based on various economic assumptions, such as gross state product, disposable income, unemployment rates 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.

Q1 2011 Mortgage Statistics

Mortgage Delinquency rates:

Mortgage Debt per Borrower:

• The average national mortgage debt per borrower increased (0.6 percent) to $190,115 from the previous quarter’s $189,046. On a year-over-year basis, the first quarter 2011 average represents a 1.4 percent decrease over the first quarter 2010 level of $192,774.
• The area with the highest average mortgage debt per borrower continued to be the District of Columbia at $375,579 followed by California at $338,792 and Hawaii at $313,770. The lowest remained in West Virginia at $99,640.
• Quarter over quarter, South Dakota showed the greatest percentage increase in mortgage debt per borrower (+3.3 percent), followed by North Dakota (+2.9 percent) and Connecticut (+2.5 percent). Areas showing the largest percentage decline were Alabama (-0.6 percent), New York (-0.4 percent) and Montana (-0.4 percent).

The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data available on TransUnion’s Web site. Information for this analysis is culled from TransUnion’s Trend Data and the anonymous credit files of approximately 10 percent of credit-active U.S. consumers, providing a real-life perspective on how they are managing their credit health.

TransUnion’s Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion’s national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels. For the purpose of this analysis, the term “credit card” refers to those issued by banks.

As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning.