Mortgage Delinquency Rate Declines for 12th Straight Quarter

Author: Brian Honea February 18, 2015 

The nation's mortgage delinquency rate for loans 60 days or more overdue continued its steady decline in the fourth quarter of 2014, falling to 3.29 percent – representing a 14 percent drop from the same quarter in 2013 (3.84 percent), according toTransUnion's latest mortgage report released Wednesday.

Q4 was the 12th straight quarter in which the mortgage delinquency rate declined, according to TransUnion.

"The mortgage delinquency rate continues to be well controlled as it slowly recedes to pre-recession levels, driven primarily by the ongoing clearance of the foreclosure backlog. More recent vintages have been performing exceptionally well," said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. "A bigger story this past quarter is the continued rise in mortgage balances. Much of this gain can be attributed to those consumers who took advantage of a low interest rate environment to purchase homes with jumbo mortgage loans. The share of these loans amongst all mortgage originations increased by 8% in Q3 2014 from 6.8% in Q3 2013 and 5.8% in Q3 2012."

Miami experienced the largest year-over-year decline in delinquency rate among metro areas with a drop from 10.4 percent in Q4 2013 down to 7.18 percent in Q4 2014 (a decline of 30.9 percent). Two more major metro areas that experienced year-over-year double digit declines in delinquency rate in Q4 were Los Angeles (from 3.06 percent to 2.4 percent, a 21.5 percent decline) and Boston (from 3.08 percent down to 2.69 percent, a decline of 12.8 percent).

"These are significant data points, because they show that mortgage delinquency rates continue to drop across the country—both in those markets with elevated delinquencies and in those that have already experienced major drops," Becker said.

The age group that saw the largest year-over-year decline in mortgage delinquency rate in Q4 was the age 30 and under group, which saw a 2.92 percent rate in Q4 2013 fall down to 2.21 percent in Q4 2014, a drop of 24.3 percent. But while delinquency rates dropped year-over-year for all age groups, debt levels increased. The under-30 group of consumers saw a the largest debt-to-borrower increase, from $149,778 in Q4 2013 up to $151,692 in Q4 2014, according to TransUnion.

There were 53.2 million mortgage accounts nationwide as of the end of Q4 2014, according to TransUnion – a slight increase from 52.9 million in the same quarter in 2013. However, Q4 2014's total was more than six million fewer than the same quarter in 2009 (59.6 million).