The mortgage market – and other consumer lending industries – will reach full recovery by the end of 2016, according to a recently released forecast by TransUnion.
"Both the mortgage and credit card markets are performing extremely well, with increased consumer participation and continued low delinquency rates," Ezra Becker, vice president of research and consulting in the financial services unit at TransUnion, said. "Despite the fact that more consumers — and more nonprime consumers — are entering the housing market, delinquency levels have remained in check and balances are growing."
Serious mortgage delinquencies are expected to fall from 2.5% at the end of 2015 to 2.06% by the end of next year, according to the credit agency.
That will be a marked improvement from the peak of 6.94% in 2010.
A rebound in housing prices has also led to an increase in the average mortgage debt per borrower. However, more prudent lending standards have helped insulate the market from the same kind of downturn experienced during the sub-prime lending boom.
"This is a clear indicator that housing prices are recovering and consumers are gaining access to more mortgage loans," said Steve Chaouki, head of TransUnion's financial services business unit.
Originators who were dedicated enough to wait out the storm and resulting fallout of the housing crisis will finally be validated by the end of next year, according to one forecast.