Mortgage Loan Delinquency Rates Rise For Fifth Straight Quarter: TransUnion

TransUnion.com released this week the results of its analysis of trends in the mortgage lending industry for the 1st quarter of 2008. The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data to be released on TransUnion’s Web site.

Statistics
Mortgage loan delinquency (ratio of borrowers 60 or more days past due) increased for the fifth straight quarter, hitting a national average high of 3.23 percent for the first three months of 2008. This statistic is up almost 8 percent over the previous quarter’s 2.99 percent average, and is a staggering 61.5 percent higher than first quarter 2007 (2.00 percent average).

Mortgage borrower delinquency rates in the first quarter of 2008 were highest in Nevada (5.81 percent) followed closely by Florida (5.38 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.17 percent), Wyoming (1.41 percent) and South Dakota (1.48 percent).

Average national mortgage debt per mortgage borrower rose slightly (0.29 percent) to $191,917 from the previous quarter’s $191,370 total. However, the first quarter 2008 average represents a 5.38 percent increase compared to the first quarter 2007 of $182,126.

The state with the highest average was in California at $362,739, followed by the District of Columbia at $359,626 and Hawaii at $300,756. The lowest average mortgage debt per mortgage borrower was in West Virginia at $94,387. Quarter to quarter, Vermont showed the greatest percent increase in mortgage debt (2.54 percent), followed by the District of Columbia (2.26 percent) and Georgia (1.94 percent). States showing the largest percentage drop in average mortgage debt were Iowa (-1.45 percent), North Dakota (-1.04 percent), and Montana (-0.95 percent).

Analysis
“The market continues to see the effect of the mortgage crisis across the country as delinquency rates again increased over the previous period,” said Keith Carson, a senior consultant in TransUnion’s financial services group. “However, this increase was not as substantial as was seen between the third and fourth quarters of 2007, possibly reflecting the impact of a tightening in the lending policies of financial institutions.”

The top three areas showing the greatest growth in delinquency from previous quarters were Alaska (28.4 percent), California (25.4 percent) and Nevada (24.1 percent). A number of states such as Wyoming, Louisiana and Mississippi actually experienced a drop in delinquencies over the previous quarter (-16.1 percent, -9.7 percent, and -7.3 percent respectively).

While mortgage debt experienced a significant drop between the third and fourth quarters of 2007, it was found to tick upward slightly in the first quarter of 2008 from $191,370 to $191,917. Although the fundamentals underlying the mortgage crises are still present, some consumers are beginning to incur more debt with the expectation that perhaps 2008 could represent a year with excellent buying opportunities.

Forecast
“The national 60-day mortgage delinquency rate among mortgage borrowers is expected to continue to rise throughout 2008 from a value of 3.23 percent in the first quarter of 2008 to just over 4 percent by year end,” said Carson. “This is primarily due to the continued deterioration in economic activity throughout the country combined with the continuing fallout of the mortgage crises.”

However, TransUnion forecasts that in 2009 the rise in mortgage delinquency rates is expected to taper off as economic conditions improve and home prices begin to stabilize. As far as state projections go, Nevada (7 percent forecasted) is anticipated to experience the highest average delinquency rate in 2008, while North Dakota (2 percent forecasted) is expected to show the lowest level of delinquency.

TransUnion’s Trend Data database
The source of the underlying data used for this analysis is TransUnion’s Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion’s national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels.

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