Mortgage delinquency rates are expected to decline in 2013, according to new data from TransUnion.
The credit-reporting agency projects that national mortgage loan delinquency rate will drop to 5.06 percent within 12 months.
A “mortgage loan delinquency” is defined by TransUnion as any loan for which more than 60 days have passed since the last payment. The national delinquency rate is 5.32 percent, currently.
Improving Economy Lowers Mortgage Default Rate
Mortgage delinquency rates peaked in late-2009. A sinking U.S. economy and falling home prices pushed 60-day mortgage lates to 6.89% of all outstanding mortgages.
The improvement since Q1 2010 can be partially attributed to job growth.
In 2008 and 2009, the economy shed 7.4 million jobs as the Unemployment Rate rose from 4.9% to 10.2 percent. Since then, however, through 2010-2012, 4.6 million jobs have been recovering; the Unemployment Rate has receded to 7.7%, and the outlook for 2013 is high.
It helps that home prices are rising, too. According to the government’s Home Price Index, home values are up 5 percent from last November and demand for homes remains high nationwide.
Nevada Default Rate Expected To Drop 19% YoY
Mortgage loan delinquencies are improving unevenly nationwide and, based on TransUnion data, 2013 witness further improvement in previously hard-hit states such as Nevada and Florida.
According to TransUnion’s projections, the three states in which mortgage loan delinquencies are expected to drop the most, year-over-year are :
- Nevada : -18.6 percent improvement
- Minnesota : -13.6 percent improvement
- California : -12.1 percent improvement
In addition, loan delinquency rates are expected to drop in Georgia (-9.2%), Florida (-8.39%), New York (-7.7%) and New Jersey (-5.0%).
The projected improvement is a function of the improving U.S. economy, a healthier national jobs market, and lower monthly payments for homeowners who have elected to refinance in 2012.
HARP, the FHA Streamline Refinance, and the VA Streamline Refinance program have each afforded underwater homeowners the chance to refinance to today’s low rates. TransUnion expects this to have a positive effect on the mortgage market’s health.