Mortgage and Credit Card Delinquencies Expected to Experience Double Digit Decreases Through 2011: TransUnion

Chicago – TransUnion released its annual forecasts today on consumer credit, which indicate national mortgage loan delinquencies (the ratio of borrowers 60 or more days past due) will drop nearly 20 percent by the end of 2011 to 4.98 percent from an expected 6.21 percent at the conclusion of 2010.  The projected decrease in 60-day mortgage delinquencies, a precursor to foreclosure, would more than double the 9.87 percent yearly decline that is expected between the end of 2009 and 2010 (from 6.89 percent to 6.21 percent).  This is also another significant change from the unprecedented year-over-year increases of 54 percent between 2006 and 2007, 53 percent between 2007 and 2008 and 50 percent between 2008 and 2009.

TransUnion is projecting at least double-digit declines in mortgage delinquencies for every state and the District Columbia through 2011.  Interestingly the states projected to experience the greatest decreases in mortgage delinquencies – Nevada (-24.77 percent), Arizona (-24-27 percent) and Florida (-23.90 percent) – are the same areas expected to have the highest 60-day mortgage delinquency rates at the end of next year (Florida – 11.06 percent; Nevada – 10.87 percent; Arizona – 7.59 percent).

North Dakota (1.12 percent), South Dakota (1.80 percent) and Nebraska (2.05 percent) should have the lowest delinquency rates at the end of next year.

“We believe the nation will see a more robust improvement in mortgage delinquencies through the end of 2011,” said Steve Chaouki, group vice president in TransUnion’s financial services group.  “TransUnion expects a steady and improving unemployment picture and continued stabilization or rise in housing prices. A key driver that will lead the reversal in mortgage delinquencies next year will be an increase in the areas of the country experiencing a rise in property values and stabilization of values in those states and markets hardest hit by the recession.”

TransUnion also released national year-end 2011 credit card delinquency rate forecasts (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) that indicate nationally consumers will experience a 10.67 percent decline from a projected 0.75 percent at the end of 2010 to 0.67 percent at the conclusion of 2011.  The projected 90-day credit card delinquency rate at the end of 2011 would mark a 50.7 percent drop from the beginning of the Great Recession (1.36 percent in Q4 2007) and constitute the lowest number since 1995.

“Credit card delinquencies will continue their sharp decline through 2011, reaching levels not seen in more than one decade,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit.  “The Credit Card Act which is continuing to cause a shift in the way lenders market and price this instrument; the payment hierarchy flip consumers displayed this past year – paying credit card bills before their mortgage; along with the recession have all factored into the way many consumers view and use credit cards. For 2011, TransUnion does not see a change in the mindset of consumers.  Even as the economy improves, they will continue to view their credit cards as instruments to get them through difficult financial straits and we expect they will continue to utilize them prudently.”

Every state is expected to see further declines in 90-day credit card delinquencies in 2011 led by Mississippi (-13.67 percent), North Carolina (-13.09 percent) and Kentucky (-12.88 percent).

Nevada (1.08 percent), Florida (0.90 percent) and Mississippi (0.82 percent) should have the highest credit card delinquency rates at the end of 2011, while North Dakota (0.38 percent), South Dakota (0.43 percent) and Nebraska (0.44 percent) are expected to have the lowest levels.

The most current mortgage and credit card delinquency data for the nation and every state can be found at www.transunion.com/trenddata.

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. www.transunion.com/trenddata

About TransUnion
As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs associates in more than 25 countries on five continents. www.transunion.com/business