The mortgage delinquency rate - the rate of borrowers 60 days or more delinquent on their mortgages - continued its fast decline, falling to 2.72% in the second quarter ended June 30, according to TransUnion.
The delinquency rate dropped 20% in the last year after reaching 3.42% in Q2 2014. The rate has contracted by half in just the last three years (5.39% in Q2 2012).
"This is the lowest mortgage delinquency level weve seen in several years down from a peak of nearly 7% in early 2010," said Joe Mellman, vice president and head of TransUnions mortgage group. "This is largely due to foreclosures and other seriously delinquent accounts continuing to work their way through the foreclosure process, as well as a reflection of the high credit quality of recent originations."
Millennials led the overall decline in mortgage delinquencies as those consumers under the age of 30 experienced a yearly drop of 26.9% from 2.32% in Q2 2014 to 1.70% in Q2 2015.
Forty-eight states and all of the top 10 largest major metropolitan statistical areas (MSAs) saw double-digit year-over-year declines in seriously delinquent balances. Miami (down 40% from 8.87% in Q2 2014 to 5.31% in Q2 2015) and Los Angeles (down 29.1% from 2.62% in Q2 2014 to 2.07% in Q2, 2015) experienced the largest percentage declines.
Mortgage originations (by loan count) to Subprime and Near Prime consumers also saw year-over-year double-digit growth of 13.3% and 22.4%, potentially signaling a slight loosening of credit.
"We believe a major reason for the increase in mortgage originations was due to falling mortgage interest rates," Mellman said. "The growth in jumbo loans for the Prime Plus and Super Prime risk tiers was another key driver. Despite this increase, it should be noted that there were 1.1 million fewer mortgage originations this past quarter compared to the pre-recession high in the third quarter of 2007."
Average mortgage balances per consumer also continued to increase on both a quarterly and yearly basis to $188,237 in Q2 2015. Mortgage balances were at $186,999 at the same time last year and at $187,175 in Q1 2015.