Mortgage delinquency rate inches higher

Recent mortgage data acquired by TransUnion indicated that the mortgage delinquency rate increased during the fourth quarter of 2011.

Recent mortgage data acquired by TransUnion indicated that the mortgage delinquency rate increased during the fourth quarter of 2011.

This is only the second time the delinquency rate has increased since peaking at the end of 2009. According to a report from the real estate data company, the rate edged higher during the three-month period to 6.01 percent from the previous quarter.

"To see that, quarter over quarter, fewer homeowners were able to make their mortgage payments is not welcome news," said TransUnion financial services business unit Time Martin. "However, it was not unexpected."

Meanwhile, the report indicated that between the third and fourth quarter, 37 states recorded an increase in the mortgage delinquency rates, while 64 percent of metropolitan areas saw similar spikes.

However, analysts from TransUnion posit that seasonal trend may be to blame for the rise in delinquencies.

"First, there tends to be a natural seasonality, evident well before the recession, of higher delinquencies in the fourth quarter; perhaps explained by borrowers balancing holiday spending vs. debt payments," Martin said. "Secondly, on the economic front, house prices continued to deteriorate in the fourth quarter and unemployment remained stubbornly high."

Additionally, Martin added that the mixture of these two factors results in a rise in negative equity among homeowners and a fall in real personal income. As households make less money, their willingness and ability to make their monthly mortgage payments on time can be negatively affected. 

Meanwhile, on an annual basis, the report noted the delinquency rate improved, as it fell roughly 6 percent from the fourth quarter in 2010. However, it was also indicated that with the sluggish improvements, it could take a significant amount of time before the delinquency rate returns to pre-recession levels. 
  
However, although mortgage industry improvements are expected to be slow coming, a number of analysts from TransUnion anticipate the delinquency rate to edge lower by the end of 2012. In the meantime, they also anticipate the delinquency rate to remain relatively weak during the first two quarters of the year.  

This is based on a number of economic variables, such as gross state product, consumer sentiment, the job market, households incomes and anticipate home values. Should there be any additional shocks to the economy or the housing market, the outlook could prove to be very different.



blog comments powered by Disqus