Mortgage delinquencies fall, while fintechs' prospects brighten

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Fewer mortgage borrowers are falling behind on their payments, and consumers' broader borrowing habits indicate an increased willingness to turn to nontraditional sources like fintechs for their lending needs, according to TransUnion.

Serious mortgage delinquency rates are plummeting in most large housing markets as 15 of the largest 20 metropolitan statistical areas experienced double-digit declines year-over-year in the fourth quarter, according to TransUnion. On a national scale, the serious mortgage delinquency rate fell from 1.86% to 1.66% over that same period.

While consumers are becoming better borrowers, mortgage originations remain relatively low. Lenders looking to attract more clients during this down time should look at overall consumer borrowing patterns, which lean in favor of fintechs.

Different from the mortgage narrative, personal loan balances grew to a record high of $138 billion, and much of that can be attributed to loans originated by fintechs, said TransUnion in a report.

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At 38%, fintechs account for the largest market share of unsecured personal loans, standing ahead of banks, credit unions and traditional finance companies. While fintechs may pose a threat to other lending institutions, this clearly illustrates consumer preferences, and affirms the mortgage industry should keep its tech game strong, particularly at a time when activity is slacking.

Average new mortgage account balances sank to $227,376 in the fourth quarter, down from $228,563 over the prior year. Less than 4% of originations went to subprime borrowers, with 80% of total originations going to consumers considered prime and above.

Despite originations for all other risk tiers falling an average of 4.3%, subprime originations did grow 2.1% year-over-year in the fourth quarter, according to TransUnion.

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