TransUnion data show the national delinquency rate hit its “first major decline” since the crisis dropping to 4.56% in the first quarter, but it is not clear whether improvements will last.
The 1Q 2013 rate is 21% lower than the 5.78% rate reported in Q1 2012 and 12% down from 5.19% in 4Q 2012.
Historically the national
“The magnitude of the improvement was unexpected,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.
The recovery process has been uneven featuring more significant improvements in some of the hardest-hit areas such as Arizona and California where the delinquency rate declined by 37.9% and 36.6%, respectively, “below the national average.” In Florida the year-over-year delinquency rate declined 20.7%.
According to Martin, housing price appreciation and low interest rates appear to have helped borrowers this quarter, “some of whom have been delinquent for a rather long time,” he said, and may now work their way out of the delinquency pit.
As a result the average mortgage debt also declined to $186,018 in 1Q 2013, down from $188,196 a year ago.
TransUnion said it expects the mortgage delinquency rate to continue its downward trend in the second quarter dropping to near 4.5% by the end of 2013.
Martin also noted that it is not yet clear whether “the first quarter was a blip, or if it’s the beginning of a more rapid decline.” Thus, as in the past few years, improvements “will hinge on how quickly older vintage loans clear through the system.”
