National Delinquency Rate Improves in Q3 but Remains High

By: Esther Cho 11/13/2012

The national mortgage delinquency rate fell further in Q3 2012 to 5.41 percent, TransUnion reported Tuesday.

The rate is a decrease from 5.49 percent in Q2 2012 and a near 8 percent drop from 5.88 percent in Q3 2011, according to the credit bureau. The delinquency rate includes borrowers who are past due by 60 or more days.

When examining improvements among metropolitan areas, however, TransUnion found a smaller share of metros experienced a drop in their rates compared to previous quarters. In Q3 of this year, 49 percent of metro areas improved their delinquency rate compared to 76 percent in Q2 and 73 percent in Q1 of this year.

Out of the 50 states, 22 saw their delinquency rates improve quarter-over-quarter, while 42 states showed improvements from last year.

While the national delinquency rate has been making progress, Tim Martin, group VP of U.S. housing in TransUnion’s financial services business unit, said, “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.”

Two hard-hit states, Arizona and California, improved the most since Q3 2011. Arizona’s delinquency rate has fallen 25 percent since last year and is now at 5.62 percent, while California’s rate has decreased almost 24 percent to 5.56 percent.

The District of Columbia registered the largest yearly increase, with the rate increasing 11 percent to 6.10 percent.

Florida led with the highest delinquency rate, which was 13.09 percent. Nevada’s rate of 10.93 percent put it at second, and New Jersey’s 8.33 percent placed it at third.

The states with the lowest rates were North Dakota (1.44 percent), South Dakota (2.21 percent), and Nebraska (2.25 percent).

In Q3 2012, the average amount of mortgage debt for individual borrowers decreased slightly to $186,445, a quarterly and yearly decrease of 1 and 2 percent, respectively.

TransUnion expects the delinquency rate to fall further in Q4 to a range of 5.25 percent to 5.35 percent.

“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.”

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