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% at the end of the first quarter, according to TransUnion.
Even as housing prices declined further through the first quarter, mortgage delinquencies were expected to remain flat or slow. However, the Q1 2011 TransUnion data released today shows the mortgage delinquency rate improved more in this quarter (down 3.4% vs. Q4 2010) than it improved last quarter (down only 0.5% from Q3 2010).
The data is part of TransUnion's ongoing series of quarterly analyses of credit-active U.S. consumers and how they manage credit related to mortgages, credit cards and auto loans.
"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," says 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,” says Martin.
TransUnion forecasts that mortgage borrower delinquency rates will 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.
The mortgage delinquency rate in Q1 2011 reflects a decrease of 3.4% from the fourth quarter of 2010 (6.41%). Year-over-year, mortgage borrower delinquency is down approximately 8.6% (from 6.77% in the first quarter 2010).
Mortgage borrower delinquency rates in the first quarter were highest in Florida (14.37%) and Nevada (14.19%), while the lowest mortgage delinquency rates continued to be concentrated in the Midwest: North Dakota (1.54%), South Dakota (2.53%) and Nebraska (2.60%).
Six states showed increases in delinquency from the previous quarter, with South Dakota (+14.0%), Maine (+8.2%) and New Jersey (+2.0%) experiencing the largest percent increases.
The average national mortgage debt per borrower increased (0.6%) 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% 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%), followed by North Dakota (+2.9%) and Connecticut (+2.5%). Areas showing the largest percentage decline were Alabama (-0.6%), New York (-0.4%) and Montana (-0.4%).
TransUnion’s Trend Data is a 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.
