CHICAGO (11/15/12)--The national mortgage delinquency rate--the rate of borrowers 60 or more days past due on payments--declined slightly for the third consecutive quarter, dropping to 5.41% in the third quarter from 5.49% in the second quarter, according to credit reporting agency TransUnion.
Year-over-year, the mortgage delinquency rate decreased nearly 8% from 5.88% in third quarter 2011.
TransUnion provides ongoing quarterly analyses of credit-active U.S. consumers and how they manage mortgages, credit cards and auto loans.
U.S. credit unions' overall loan delinquency rate at the end of the second quarter (the most recent data available) was 1.2%--down from 1.6% at the end of 2011, according to data compiled by the Credit Union National Association's (CUNA) Economics and Statistics Department.
During that time frame, credit unions' delinquencies declined to 1.61 % from 2.22% for first mortgages; and to 1.23% from 1.43% for second mortgages. Also, net charge-offs as a percentage of average loans fell to 0.76% from 0.91%, CUNA said.
"Continued declines in mortgage delinquency rates are a welcome sign and reflect that relatively more homeowners are able and willing to make their mortgage payments each month," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. "However, we still have a long way to go to reach more 'normal' conditions of a delinquency rate in the 1%-2% range for the U.S. average."
Twenty-two states saw improvement in their mortgage delinquency rates from last quarter. Forty-two states improved from last year.
Forty-nine percent of metropolitan areas experienced quarterly improvement in their mortgage delinquency rates in the third quarter. That is a significant departure from the previous two quarters, when 76% in second quarter and 73% in first quarter of the metropolitan statistical areas improved, TransUnion said.
Arizona and California, two of the states most negatively impacted by the mortgage crisis, experienced the greatest improvement in mortgage delinquency rates on a year-over-year basis. Since the third quarter of 2011, Arizona's has dropped nearly 25% to 5.62% from 7.46%. California has dropped nearly 24% in that same time, to 5.56% from 7.29%.
Currently, only two states remain with double-digit delinquencies--Florida at 13.09% and Nevada at 10.93%--and both showed improvement year over year.
The District of Columbia experienced the largest year-over-year increase in mortgage delinquency rate--up over 11%-- to 6.10% from 5.47%. Eight states also experienced year-over-year increases, with New Jersey registering both the highest overall rate of the group at 8.33% and the largest increase, up nearly 10% year over year.
TransUnion said it expects the mortgage delinquency rate to fall again in the fourth quarter, but only slightly.
"It's generally tough to expect improvement in delinquency rates in the fourth quarter of the year given the extra demands on household income that many experience during the holiday season," said Martin. "However, we saw some improvement in the housing market in the third quarter with regard to house prices, home sales and increased refinance activity, and we believe we will start to see these numbers reflected in improved mortgage delinquency next quarter. As such, we forecast the year-end delinquency rate to improve to something in the 5.25% to 5.35% range."
TransUnion's forecast is based on several economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income and real estate values. The forecast would change if there are unanticipated shocks to the economy affecting recovery in the housing market or if home prices fall more than expected.