U.S. Mortgage Delinquencies Dropped, According to TransUnion

In its latest mortgage report, financial data specialist TransUnion says that U.S. mortgage delinquencies have dropped for the 10th consecutive quarter to 3.46 percent at the end of the second quarter of 2014. In the third quarter of 2013, the delinquency rate was 4.32 percent.

Chicago—In its latest mortgage report, financial data specialist TransUnion says that U.S. mortgage delinquencies have dropped for the 10th consecutive quarter to 3.46 percent at the end of the second quarter of 2014. In the third quarter of 2013, the delinquency rate was 4.32 percent.

The company defines delinquency as a mortgage more than 60 days late. While its statistics don’t differentiate between mortgages on single-family properties and condos or other multifamily properties, the overall delinquency rate indirectly impacts the demand for rental apartments.

There are a number of reasons for the persistence of the drop, according to Steve Chaouki, head of financial services for TransUnion. These include the clearing of severely delinquent accounts through foreclosure, as well as a lower rate of new delinquencies on post-recession mortgages, which generally are of significantly higher credit quality and have experienced much better performance than loans originated before the recession.

Chaouki also notes that the decline in delinquencies is across all age groups of borrowers. The youngest mortgage borrowers, those below 30, have both the lowest mortgage delinquency rate (2.34 percent), and have experienced the steepest decline in the last year (down by more than one-quarter of the total). However, this age group also represents a small share of all mortgage accounts, some 4.16 percent.

All 50 states and the District of Columbia experienced declines in their mortgage delinquency rates between Q2 2013 and Q2 2014, according to TransUnion. Most major markets also saw large annual drops in their mortgage delinquency rates, including San Francisco (down 29.3 percent), Phoenix (down 28.7 percent) and Miami (down 26.7 percent). Markets lagging the national average in terms of the rate of delinquency improvement include Philadelphia (down only 1.1 percent), Boston (down 4.1 percent) and New York (down 5.5 percent).