The U.S. mortgage delinquency rate is lower than it first appears when accounting for the number of mortgages delinquent for 180 days or more, credit bureau TransUnion claims in a new report.
These home loans are older vintages leftover from the worst part of the credit crunch and are less likely to define what is happening in the mortgage space today.
The most recent mortgage delinquency rate (counting the rate of borrowers 60 days or more past due) improved 21% year-over-year in the first quarter and 12% from the fourth quarter of 2012.
TransUnion places the current mortgage delinquency rate at 4.56%, which is double the rate recorded prior to the real estate crisis.
This alone may be enough to convince analysts that delinquent home loans remain a problem, but TransUnion says a deeper look at the data shows loans originated after 2010 are holding their own, making it more likely today's delinquency rate is negatively influenced by older vintages.
Mortgages originated before 2009 represent 50% of all outstanding mortgages and also make up 86% of all delinquencies.
Twenty percent of all mortgages originated in 2007 have at one time or another been late and 14.5% of that pool experienced a delinquency within the first three years of the life of the loan.
But look at newer pools and only 2.5% of mortgages in the 2010 vintage have experienced a delinquency in the first three years following origination.
"Some people may see the high overall mortgage delinquency number and worry that mortgage borrowers are still a bad credit risk; but we don’t believe that’s the right conclusion," said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.
"The newer vintages are performing quite well, and even the older vintages, at one time deteriorating quickly, are now contributing new delinquent borrowers at rates nearly identical to the good-performing newer mortgages."