TransUnion.com: Mortgage Loan Delinquency Rates Rise for Ninth Straight Quarter, but at a Slower Pace

Chicago — TransUnion.com released today the results of its analysis of trends in the mortgage industry for the first quarter of 2009 and the associated impact on the U.S. consumer. The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data available on TransUnion’s Web site. Information for this analysis is culled quarterly from approximately 27 million anonymous, randomly sampled, individual credit files, providing a real-life perspective on how U.S. consumers are managing their credit health.

Statistics

Mortgage loan delinquency (the ratio of borrowers 60 or more days past due) increased for the ninth straight quarter, hitting a national average high of 5.22 percent for the first quarter of 2009. Traditionally seen as a precursor to foreclosures, this statistic is up almost 14 percent from the previous quarter’s 4.58 percent average. This compares to an increase of 16 percent from the third to fourth quarter of 2008. Year-over-year, mortgage loan delinquency is up approximately 62 percent (from 3.23 percent).

Mortgage borrower delinquency rates in the first quarter of 2009 were highest in Nevada (11.61 percent) and Florida (11.01 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.51 percent), South Dakota (1.94 percent) and Alaska (2.14 percent). The three areas showing the greatest percentage growth in delinquency from the previous quarter were Hawaii (+34.4 percent), Oregon (+30.7 percent) and Nevada (+28.9 percent). However, there were some bright spots: Nebraska and South Dakota both showed a decline in mortgage delinquency rates, down 4.7 percent and 1.5 percent from the previous quarter, respectively.

The average national mortgage debt per borrower rose again (1.41 percent) to $195,500 from the previous quarter’s $192,789. On a year-over-year basis, the first quarter 2009 average represents a 1.87 percent increase compared to the first quarter 2008 average of $191,917.

The area with the highest average mortgage debt per borrower was still California at $365,192, followed by the District of Columbia at $360,217 and Hawaii at $314,269. The lowest average mortgage debt per borrower was in West Virginia at $97,187. Quarter to quarter, Rhode Island showed the greatest percent increase in mortgage debt (+5 percent), followed by Ohio (+4.9 percent) and Idaho (+4.5 percent). Areas showing the largest percentage drop in average mortgage debt were the Illinois (-2.5 percent), Alaska (-2.1 percent) and Iowa (-0.78 percent).

Analysis

"At the end of the 2001 Recession, the national 60-day or worse mortgage delinquency rate increased to a high of just over 1.4 percent and then dipped before beginning a longer-term, gradual upward trend," said Keith Carson, a senior consultant in TransUnion’s financial services group. "As the recession came to a close in November of that year, metropolitan areas in the South were found to have some of the highest mortgage delinquency rates. In the current recession, metropolitan areas in Florida and California are leading the pack in terms of mortgage delinquency: Miami, Fla. (16.39 percent), Fort Myers, Fla. (15.28 percent), Merced, Calif. (15.24 percent), Stockton, Calif. (13.92 percent), and Naples, Fla. (13.01 percent). Today, the least risky metropolitan area is Bismarck, N.D. – a position fairly consistent with what it held during the previous recession."

"The troubling news is that the mortgage delinquency rate continues to climb upward at an average quarterly pace almost doubling that experienced in the last recession," continued Carson. "For example, during the 2001 recession (which began in March and ended in November of the same year), the average quarter-to-quarter national mortgage delinquency growth rate was nearly 6.5 percent – compared to the nearly 12 percent quarter-to-quarter delinquency growth we are experiencing today. However, this quarter’s results offer a glimmer of hope and a chance for optimism. For the first time since the recession began at the end of 2007, the quarterly growth rate for national mortgage delinquency decreased. On a state basis, for example, Florida’s quarterly growth rate for mortgage delinquency went down from 22 percent in the fourth quarter of 2008 to almost 16 percent in the first quarter of this year. While this may sound like trying to make good news out of bad, in fact it is an indication that we may be currently working our way through the worst of the recession."

Forecast

"Our national predictions were only 1.6 percent off from the actual delinquency rate for first quarter 2009. We have adjusted our projections to reflect data from the most recent quarter, and adopted slightly different scenarios in consumer confidence and the general economy. These forecasts now show the 2009 mortgage delinquency rates reaching 7 percent by year end," said Carson. "Credit performance generally lags economic conditions. Thus although there have been some pockets of promising news on the economic front, we see unemployment and deflated housing prices continuing to pushing up delinquency rates through the remainder of this year. At this juncture it is difficult to predict with any certainty what impact, if any, the various government initiatives will have on the mortgage delinquency."

As far as state projections go, Florida is still anticipated to continue to experience the highest delinquency rate through the end of 2009, reaching as high as 18 percent by year-end. Likewise, North Dakota is expected to continue to exhibit the lowest mortgage delinquency rate, reaching a peak in mid 2009 and then declining to just over 1.5 percent by year-end.

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TransUnion’s Trend Data database

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 associates in more than 25 countries on five continents. www.transunion.com/business