Delinquencies hit lowest rate since before financial crisis

by Ryan Smith19 May 2015
Mortgage delinquency hit its lowest level since before the financial crisis in the first quarter, according to new data from TransUnion.

The mortgage delinquency rate (the rate of homeowners 60 days or more past due on their mortgage payments) dropped to 2.95% in the first quarter – the first time the rate has been below 3% since before the financial crisis. The first quarter also marked the 13th consecutive quarterly drop in the mortgage delinquency rate. The delinquency rate fell almost 18% from the first quarter of 2014, when it was 3.59%, according to TransUnion.

The delinquency rate for subprime customers was also down, dropping nearly 9% year over year to 27.23%. the delinquency rate for subprime borrowers peaked in 2010 at 40.48%.

“It’s taken more than seven years, but the mortgage delinquency rate has reached pre-recession levels,” said Joe Mellman, vice president and head of TransUnion’s mortgage group. “We continue to see a steady decline in the mortgage delinquency rate, primarily driven by strong performance by newer-vintage loans. “It’s also encouraging to see continued delinquency rate declines for the subprime and near-prime risk groups.”

All 50 states saw yearly declines in mortgage delinquency, and most metro areas saw healthy drops as well, according to TransUnion. The Miami area, for instance, saw a 36.1% drop in delinquency year over year, while San Francisco’s delinquency rate fell 31.1%.

“It’s a positive sign to see double-digit percentage delinquency rate declines in major markets across the country, as it demonstrates the improvements are widespread – not just a regional phenomenon,” Mellman said.

The overall quality of borrower credit seems to be improving as well, TransUnion reported. The share of mortgage balances held by subprime and near-prime customers fell by 98.% and 2.9%, respectively. Subprime and near-prime customers now hold just 32% of the total balances they held at the start of 2010, according to TransUnion.
 
 

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