Mortgage delinquency has fallen eight quarters in a row to the lowest level in half a decade. Yet, the rate still remains elevated by historical standards.
Past-due payments of at least 60 days on all U.S. residential loans finished the fourth-quarter 2013 at 3.85 percent, TransUnion reported.
The rate reflected loan performance data gathered from TransUnion’s proprietary Industry Insights Report on nearly 53 million mortgages. Numbers are drawn from anonymized credit data on “virtually every credit-active consumer in the United States.”
Home loan performance continued to improve from the third quarter, when the rate had already fallen 23 basis points from the prior three-month period to 4.09 percent.
The 60-day rate has fallen 123 BPS from a year earlier. The fourth-quarter 2012 level was revised down 11 BPS from the original report.
In fact, the past-due rate has improved each quarter since the fourth-quarter 2011, when the rates was 6.01 percent.
In addition, the rate was the lowest it’s been since the third-quarter 2008 rate of 3.96 percent.
TransUnion forecasts a 3.70 percent rate by the end of March.
“TransUnion’s forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and real estate values,” the report said. “The forecast would change if there are unanticipated shocks to the economy affecting recovery in the housing market or if home prices begin to depreciate once again.”
TransUnion Head of Financial Services Steve Chaouki explained in the report that the higher credit quality of recent vintages is being accompanied by delinquency rates similar to those seven to 10 years ago. As older vintages exit the system, mortgage delinquency will decline even further.
But Chaouki cautioned that despite the positive trend, delinquency still continues to be twice as high as levels observed prior to the housing bubble.
“The housing market also still shows some volatility, with both housing prices and originations dropping in the latter part of 2013 after experiencing improvements in the first part of the year,” Chaouki said.
New Jersey and New York were the only two states that did not have double-digit percentage declines in their respective delinquency rates.
Among five of the biggest states, Florida’s 8.18 percent was the highest.
Next was 5.67 percent in New York and 4.17 percent in Illinois.
Arizona had the biggest decline, falling to 3.14 percent at the end of last year from 5.11 percent at the end of 2012.
