Home/Mortgages/Mortgage Delinquencies Expected to Rise Through Early 2012, Then Decline

December 30, 2011 (Chris Moore)

National mortgage delinquencies are expected to rise to just over six percent in the first quarter of 2012 according to TransUnion and then gradually improve over the last three quarters of the year settling in at about five percent by the end of 2012.

The delinquency rate at the end of the third quarter of 2011 was 5.88 percent, up from 5.82 percent at the end of the second quarter. The rise in the delinquency rate in the third quarter of this year was the first increase in six quarters, dating all the way back to the fourth quarter of 2009.

TransUnion anticipates the mortgage delinquency rate to peak at 6.02 percent at the end of the first quarter of 2012. Despite the increases, mortgage delinquencies at the end of this year are still expected to be seven percent lower than they were at the beginning of the year. This would also follow a seven percent decrease in 2010.

Tim Martin, group vice president of U.S. housing in TransUnion’s financial services business unit, stated, “Although house prices and unemployment will likely face continued pressure next year, this forecast calls for gradual improvements in the second half of 2012 to other key variables, like improving credit quality of new originations, consumer confidence and GDP, that will positively influence homeowners’ ability and willingness to pay their mortgages. If things go as expected, there are no additional negative shocks to the U.S. economy and the average borrower’s situation, mortgage delinquencies could fall as much as 16% in 2012 compared to 2011.”

TransUnion projects that mortgage delinquencies will decline in 38 states while 12 states and the District of Columbia are expected to see a rise in delinquency rates.

The states expected the see the biggest declines in delinquency rates are Arizona (-46.25%), Wisconsin (-45.52%) and Colorado (-40.34%).

The states expected to have the highest delinquency rates by the end of 2012 are Florida (13.20%), Nevada (11.09%) and the District of Columbia (7.91%). The states that are expected to have the lowest delinquency rates at the end of 2012 are North Dakota (1.30%), South Dakota (1.96%) and Wisconsin (2.11%).

TransUnion defines the national mortgage loan delinquency rate as the ratio of borrowers 60 or more days past due.

Tags: TransUnion, mortgage loan delinquencies, delinquency rate, improving credit quality, consumer confidence, GDP