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Mortgage delinquency rates improve across the nation

Improving economic data suggests ongoing gains

The housing market continued to heal as the national mortgage delinquency rate plummeted 4.09% in the third quarter, a drop of more than 23.3% when compared to the same time period last year, according to TransUnion’s quarterly report.

The mortgage delinquency rate dropped on a quarterly basis, 5.33% from 4.32% — the seventh straight quarterly decline.

Nonetheless, it’s important to note that the overall delinquency rate is still high relative to normal, but the year-over-year improvement is great news for homeowners and lenders, TransUnion pointed out.

Individually, every state and the District of Columbia posted an improvement in their mortgage delinquency rate from last year.

Five states experienced more than 30% declines in their mortgage delinquency rates, including Arizona, California and Utah.

"This isn’t a sample data set,” said Tim Martin, group vice president of U.S Housing for TransUnion’s financial services business unit.

He added “We looked at all 52 million installment-based mortgages in the U.S. and the trend is clear – the percentage of borrowers willing and able to make their mortgage payments continues to improve.” 

TransUnion recorded 52.31 million mortgage accounts as of the third quarter, slightly down from 54.23 million accounts from the previous year.

Meanwhile, new account originations increased to 2.34 million, up from 2.09 million last year, which is a major increase from just two years ago when there were 1.32 million new account originations.

"New mortgage originations showed good growth through the second quarter of this year, largely the result of increased refinance transactions driven by low rates and increasing home prices," Martin said.

He continued, "However, mortgage rates started to increase right around Memorial Day, and when the data come out next quarter, we expect it to show that new originations are decreasing as a result."

Going forward, the continued decline in delinquency rates will continue in the final three months of the year, remaining just under 4%.

Various factors will likely contribute to this trend, including consumer sentiment, unemployment rates and home prices.

"New originations will be down and non-prime borrowers will start to re-emerge," Martin concluded. "At this point, we believe delinquency rates will continue to decline."

3d rendering of a row of luxury townhouses along a street

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