Delinquency Rates Rise for Eighth Straight Quarter
Chicago-In a recent study for the fourth quarter of 2008, TransUnion.com here said mortgage loan delinquency, a ratio of borrowers 60 or more days past due, increased for the eighth straight quarter, hitting a national average high of 4.58%.
This statistic is up almost 16% from the previous quarter's 3.96% average and up 53% from the same period in 2008 at 2.99%.
The report, part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data, looked at information from approximately 27 million anonymous, individual credit files, providing a real-life perspective on how U.S. consumers are managing their credit health.
The study said mortgage borrower delinquency rates in the fourth quarter of 2008 were highest in Florida (9.52%) and Nevada (9.01%), while the lowest rates were found in North Dakota (1.21%), Alaska (1.74%) and South Dakota (1.97%). The three areas showing the greatest percentage growth in delinquency from the previous quarter were Arizona (26.2%), Montana (24.5%) and South Dakota (23.9%).
However, the news is not altogether bad: North Dakota and Alaska both showed a decline in mortgage delinquency rates, down, respectively, from the previous quarter's 10% and 19%.
The average national mortgage debt per borrower rose slightly (0.26%) to $192,789 from the previous quarter's $192,287. On a year-over-year basis, the fourth-quarter 2008 average represents a 0.74% increase compared to the fourth-quarter 2007 average of $191,370.
The area with the highest average mortgage debt per borrower was California at $356,421, followed by the District of Columbia at $354,082 and Hawaii at $310,289.
The lowest average debt per borrower was in West Virginia at $96,242. Quarter-to-quarter, Illinois showed the greatest percent increase in mortgage debt (2.55%), followed by Texas (1.96%) and Louisiana (1.89%).
Areas showing the largest percentage drop in average mortgage debt were the District of Columbia (2.72%), Wisconsin (1.5%) and Rhode Island (1.11%).
The dramatic rise in the mortgage delinquency rates since the end of 2007 highlights a worthwhile comparison to the nation's last recession, the company said. The 2001 recession, beginning in March of 2001 and ending in November of the same year, resulted from a collapse in the dot-com bubble combined with the terrorist attacks of Sept. 11.
During that time, TransUnion said the mortgage delinquency ratio increased by almost 28%. While considered a large increase at the time, in comparison to the delinquency impact of the current recession, it might be viewed as modest. This time around the national average mortgage delinquency rate has increased by almost 79% to date, essentially tripling what occurred in the last recession.
"Unfortunately, the mortgage sector continues to experience increases in the delinquency rate due to worsening economic conditions in both the labor and financial markets," said Keith Carson, a senior consultant in TransUnion's financial services group.
"The fourth quarter of 2008 showed not only an increase in the nation's unemployment rate and declines in both home prices and per-capita disposable income, but a downward slide in consumer confidence. As a result, homeownership continues to deteriorate in a credit market that has shown little signs of thawing even for the most creditworthy consumers.
"The company's revised forecasts now show the 2009 mortgage delinquency rates reaching as high as 8% or more by yearend," said Mr. Carson."Economic factors will continue to have a significant impact on the credit markets as unemployment increases and housing prices continue to erode. But if government efforts to reduce rates are successful, there could be a gradual increase in purchases, moving toward a stabilization."