TransUnion Projects Drop in Delinquencies, but Rate Remains High

TransUnion forecasts a decline in mortgage delinquency rates for 2013, but the rate is expected to stay above 5 percent.

The credit bureau expects the mortgage delinquency rateratio of borrowers 60 or more days past dueto drop to 5.06 percent by the end of 2013 from an estimated 5.32 percent at the end of this year.

As house prices and unemployment slowly improve, TransUnions forecast indicates that the national mortgage delinquency rate will gradually drop throughout 2013, said Tim Martin, group VP of U.S. housing in TransUnions financial services business unit.

At its peak, the mortgage delinquency rate reached 6.89 percent in the fourth quarter of 2009 after increasing for 12 straight quarters from 1.94 percent in the fourth quarter of 2006.

As of the third quarter of this year, the national mortgage delinquency rate was 5.41 percent, representing a 21 percent decrease from the 2009 peak.

If the rate does drop to 5.06 in 2013 as TransUnion predicts, the decrease would only be a 27 decline from the peak and still remain above normal levels, which the bureau says ranges from 1.5 to 2 percent.

While we are encouraged by the direction of the forecast, we would have hoped for a projection that called for a more substantive drop in delinquencies. If the pace of improvement does not pick up, it will take a very long time to get back to normal delinquency rates, Martin added.

Performance among individual states will vary, but most states should see a decline in delinquencies. TransUnion forecasts mortgage delinquencies will drop in 34 states and the District of Columbia, with 13 states seeing increases.

TransUnion expects the most substantial declines in delinquencies to occur in Nevada (-18.62 percent), Minnesota (-13.58 percent), California (-12.14 percent) and Arizona (-11.61 percent).

States that have struggled to rebound after the mortgage crises are also projected to see declines in delinquencies. The mortgage delinquency rate in Georgia is expected to fall by 9.19 percent, followed by Florida (-8.39 percent), New York (-7.67 percent), and New Jersey (-4.95 percent).