After years of decline, mortgages outstanding are expected to grow next year. Despite an up tick this quarter, delinquency is projected to fall to pre-crisis levels.
The average borrower is expected to have $189,917 in mortgage debt as of the fourth quarter of this year, more than the $187,139 as of the fourth-quarter 2014.
An even further increase is expected by the final three-month period of next year, when the average mortgage debt per borrower is projected to reach $192,512.
The predictions were made in the TransUnion 2016 Mortgage Forecast.
In all, there were 52.6 million mortgage accounts that were outstanding as of the third-quarter 2015, slightly fewer than the 52.8 million as of the second quarter.
Outstandings were also down from 53.2 million as of the third quarter of last year.
Although home loans outstanding have been significantly contracting since the 62.85 million loans in place as of 2008, Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit, predicted in the report that mortgages outstanding will grow next year if the economy continues to perform well.
Chaouki noted that second-half 2016 mortgage originations are likely to get a boost from Fannie Mae’s plan to utilize trended data in the assessment of mortgage applicants.
Mortgage delinquency of at least 60 days, which was 2.40 percent in the third-quarter 2015, is forecasted to deteriorate — to 2.50 percent as of the fourth quarter.
But then TransUnion expects delinquency to sink to 2.06 percent by the end of next year.
The past-due rate peaked at 6.94 percent in the first-quarter 2010, while “normal” delinquency is between 1.5 percent and 2 percent.
“Newer vintage mortgage loans have been performing at this level for the last few years, but a combination of factors such as the funneling of bad mortgage loans through the foreclosure process, an improvement in the employment picture and an up tick in housing prices were needed to get back to normal,” Chaouki explained.
For just borrowers who are less than 30 years old, the third-quarter 2015 sixty-day delinquency rate was just 1.62 percent — the lowest of any age group.
The rate climbed to 3.08 percent for borrowers who were between 40 and 49 years old — the worst-performing group.
Those over age 60 had a rate of 1.77 percent.
“Despite the fact that more consumers — and more non-prime consumers — are entering the housing market, delinquency levels have remained in check and balances are growing,” TransUnion Vice President of Research and Consulting Ezra Becker said in the report. “This points to responsible lending practices and a consumer base that is clearly in a better position to make payments on their loans.”
The report concluded that the
consumer-lending market will have fully recovered by the end of next year from the mortgage crisis and the Great Recession.
