Mortgage Delinquencies Show Big Drop

By:: Kara Johnson | November 23, 2010

Mortgage delinquencies fell by nearly 3.5 percent in the third quarter of the year, the biggest quarterly decline since the fourth quarter of 2006, according to figures released today by credit reporting company TransUnion.

The ration of borrowers past due by 60 days or more fell to 6.44 percent of outstanding mortgages, down from a national average of 6.67 percent in the second quarter of the year. On a percentage basis, the decline was more than twice as large as the reduction shown in either of the previous two quarters in 2010.

The figure is considered a leading indicator of foreclosure activity. On an annual basis, the third quarter delinquency rate still shows an increase, up 3.04 percent from the third quarter of 2009.

“This decline in mortgage delinquency rates, in tandem with a stabilization in housing prices in many areas of the country and record low interest rates for mortgage loans, are all positive signs that this industry is moving in the right direction, coming out of one of the worst recessions in recent memory,” said FJ Guarrera, a vice president in the company’s financial services unit. “In addition, TransUnion is seeing positive movement and some traction in the industry in terms of real estate inquiries."

Guarrera cautioned, however, that the current mortgage and real estate industry is unusually sensitive to factors that might not have had a big impact in the past, and that factors such as a new round of adjustable rate mortgages due to reset in the months to come, along with high levels of unsold foreclosures and continuing high unemployment, could quickly quash recent positive trends.

Real estate loan inquiries were also up in the third quarter, although still down from one year ago. Measuring requests for credit inquires related to real estate transactions, the TransUnion Real Estate Inquiry Index rose 6.5 percent in the third quarter, to stand at 72.86.

The figure is down 10.6 percent from the third quarter of 2009. A score of 100 on the index reflects the average levels of inquires in 2000. On an annual basis, mortgage originations were down 23 percent from the third quarter of 2009, with declines posted in all 50 states and the District of Columbia.

Average mortgage debt per borrower decreased by 0.58 percent in the third quarter, to $190,176, down 1.52 percent from one year ago. The District of Columbia had the nation’s highest average mortgage debt, at $368,255, followed by California at $342,695 and Hawaii at $309,536. The lowest average debt was in West Virginia, at $100,263.

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