Mortgage Delinquency Rate Continues to Drop

Author: Colin Robins May 7, 2014

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The mortgage delinquency rate declined to 3.61 percent at the end of the first quarter of 2014, according toTransUnion's latest mortgage report. Overall, the mortgage delinquency rate has dropped 24 percent in the last year, and has experienced nine consecutive quarters of decline.

Currently, the rate is at the exact same level as it was in the second quarter of 2008, according to the company.

"It's encouraging to see mortgage delinquencies drop once again, especially during a period when mortgage originations slowed considerably," said Steve Chaouki, head of financial services for TransUnion. "This trend in improved performance is driven in part by lenders working their way through the foreclosure backlog, along with continued conservatism in underwriting new mortgages."

Statewide, all 50 states and the District of Columbia saw declines in mortgage delinquency rates between the first quarter of 2013 and the first quarter of 2014. The largest percentages of decline continue to occur in states most impacted by the mortgage crisis: Arizona (-37.8 percent), California (-36.9 percent), and Nevada (-34.0 percent).

"Both Arizona (2.81 percent) and California (2.80 percent), which just five years earlier had delinquency rates nearly double the national average, are now significantly lower than the rest of the nation," TransUnion remarked.

States with the smallest year-over-year declines include New York (-7.9 percent), New Jersey (-8.1 percent), and Vermont (-8.5 percent).

The company projects that consumer delinquency trends will continue on a downward slide. TransUnion forecasts that mortgage delinquencies will continue falling to approximately 3.4 percent by the end of June. The company based its projections on different economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and real estate values.

"We expect mortgage originations will once again pick up steam, and with continued tight lending standards, this should only help further bring down the mortgage delinquency rate," Chaouki added.