TransUnion: Mortgage Loan Delinquency Rates Rise For Sixth Straight Quarter

TransUnion.com released today the results of its analysis of trends in the mortgage industry for the second quarter of 2008. The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data to be released on TransUnion’s Web site.

Statistics

Mortgage loan delinquency (ratio of borrowers 60 or more days past due) increased for the sixth straight quarter, hitting a national average high of 3.53 percent for the second quarter of 2008. Traditionally seen as a precursor to foreclosures, this statistic is up more than nine percent from the previous quarter’s 3.23 percent average and up approximately 51 percent from the same period last year.

Mortgage borrower delinquency rates in the second quarter of 2008 were highest in Nevada (6.63 percent) and Florida (6.47 percent) while the lowest mortgage delinquency rates were found in North Dakota (1.10 percent), South Dakota (1.5 percent) and Montana (1.54 percent). On a positive note, six states dropped in mortgage delinquency from the previous quarter: Missouri, Kansas, Nebraska, North Dakota, New Hampshire, and Montana. Nebraska dropped the most by 6.67 percent from 1.65 percent to 1.54 percent.

Average national mortgage debt per mortgage borrower rose slightly (0.4 percent) to $192,681 from the previous quarter’s $191,917 total. However, the second quarter 2008 average represents a 3.35 percent increase compared to the second quarter 2007 average of $186,432.

The area with the highest average mortgage debt per borrower was California at $361,988, followed by the District of Columbia at $355,875 and Hawaii at $304,096. The lowest average mortgage debt per mortgage borrower was in West Virginia at $94,765. Quarter to quarter, Montana showed the greatest percent increase in mortgage debt (5.38 percent), followed by Idaho (2.62 percent) and South Dakota (2.38 percent). Areas showing the largest percentage drop in average mortgage debt were Georgia (-1.32 percent), Florida (-1.11 percent), and the District of Columbia (-1.04 percent).

Analysis

The market continues to see the effect of the mortgage crisis across the country as delinquency rates again increased over the previous period.

The three areas showing the greatest percentage growth in delinquency from the previous quarter were Wyoming (28.3 percent), Oregon (23.5 percent) and Florida (20.2 percent). A number of states such as Montana, New Hampshire and North Dakota actually experienced a drop in borrower delinquency ratio over the previous quarter: (-6.6 percent, -6.5 percent, and -6.0 percent, respectively).

“The continued increase in the mortgage delinquency rate was not surprising,” said Keith Carson, a senior consultant in TransUnion’s financial services group.  “The second quarter of 2008 showed not only a substantial increase in the nation’s unemployment rate and unprecedented gas prices, but also a continued decline in consumer confidence. Furthermore and as we expected, the downward trend for housing prices continued at the national level as supply continues to exceed demand in certain markets.”

Forecast

“The national 60-day mortgage delinquency rate among mortgage borrowers is expected to continue to rise throughout 2008 from a value of 3.53 percent in the second quarter of 2008 to just over 4 percent by year end,” said Carson.  “This is primarily due to the continued economic weakness in certain segments of the country combined with the continuing fallout of the mortgage crisis.”

However, TransUnion forecasts that later in 2009 the rise in mortgage delinquency rates will taper off as economic conditions improve and home prices begin to stabilize. As far as state projections go, Nevada (8.7 percent) is anticipated to experience the highest average delinquency rate by the end of 2008, while North Dakota (1.3 percent) is expected to show the lowest level of delinquency.

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.

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 more than 3,600 employees in more than 25 countries on five continents. www.transunion.com