Quarterly mortgage delinquency, which has been on the decline for four years, is expected to improve further next year.
As of September, ninety-day delinquency on all U.S. mortgages was 4.07 percent, according to data from the Federal Reserve Bank of St. Louis.
The rate of serious delinquency tumbled 16 basis points from June. Excluding foreclosures, the 90-day rate dropped 4 BPS, while the foreclosure rate dropped 10 BPS.
Secondary lender Fannie Mae reported that its 90-day delinquency fell another 4 BPS between September and October, while the rate at its secondary cousin Freddie Mac was down another 5 BPS during the same period.
TransUnion reported last month the 60-day mortgage delinquency was 3.36 percent in the third quarter, 6 BPS better than three months earlier and 67 BPS lower than a year earlier.
The report from TransUnion indicated that mortgage delinquency has fallen each of the last 11 quarters.
Sixty-day delinquency peaked at 6.93 percent in the first-quarter 2010.
An annual forecast released Wednesday by the information provider indicates that 60-day delinquency will fall another 24 BPS in the fourth quarter.
In addition, another 61 BPS will be shaved off the 60-day rate by the end of next year.
“That would end next year at the lowest level since hitting 2.61 percent in Q3 2007, prior to the Great Recession,” TransUnion stated.
It would also represent four consecutive years of quarterly declines, according to TransUnion Head of Financial Services Steve Chaouki.
He predicts relatively low interest rates during 2015 and sees unemployment subsiding. Both factors are expected to aid in improved loan performance.
“Foreclosures are also expected to continue to funnel through the legal system in 2015, which will reduce delinquencies that have been lingering for some time,” Chaouki stated in today’s report. “All of these factors will contribute to a further decline in mortgage delinquencies.”
But Chaouki noted that mortgage delinquency is expected to linger above historic levels of between 1.5 percent and 2.0 percent.
He explained that delinquency had started deteriorating even before the recession began.
“It is also important to note that the housing environment is far different now than it was when we last observed rates this low,” Chaouki added. “Regulatory requirements and scrutiny, recent home value appreciation and consumers’ prioritization of payments have all changed the landscape of consumer mortgage lending.”
