Delinquency
rates throughout the United States continued to increase during the third
quarter of 2009. The good news is that,
for the third consecutive quarter that increase has slowed.
This
information is contained in a report released today by TransUnion.com analyzing
trends in the mortgage industry and the impact of those trends on the consumer.
The
company, one of the three major credit reporting agencies in the country,
distilled the information from 27 million individual credit files, a universe that
represents approximately 10 percent of all credit-active U.S. Consumers.
The
national rate for delinquencies of 60 days or more hit an all time high of 6.25
percent during the third quarter. This
was an increase of 7.57 percent over the 5.81 percent national rate during the
second quarter. This is the 11th
consecutive quarter that the delinquency rate nationwide has increased.
The
growing delinquencies, however, are best seen in the context of the last two
years. For example, the delinquency rate
from the end of the fourth quarter of 2008 to the end of the first quarter of
2009 increased by 14 percent and the next three-month period saw an 11.3
percent rise. Since then each quarter
has shown a lower rate of increase than the quarter before. This could indicate
that we are nearing the peak level for mortgage delinquencies and, consequently
foreclosures, and that the rate will eventually begin to decline.
The
states with the highest delinquency rates continue to be Nevada and Florida at
14.5 percent and 13.3 percent respectively while North and South Dakota were lowest
at 1.7 percent and 2.3 percent closely followed by Vermont at 2.6 percent. North Dakota, however, was among the states
with the greatest increase in the rate, up 16 percent since last quarter. Other states with double digit increases were
Wyoming (17.9 percent) and Kansas (17.4 percent. The District of Columbia's delinquency rate
decreased 0.19 percent.
The
amount American's owed on their mortgages dropped from an average of $193,811
in the second quarter to $193.121 in the third, a decline of 0.36 percent. This, however, is a .043 percent increase
over the average mortgage debt of $192,287 one year ago.
The District
of Columbia and California had the highest level of debt with averages over
$350,000 per borrower. West Virginia came in last at $97,265.
TransUnion
said that economic indicators during the third quarter were "a mixed bag." The unemployment rate is also still climbing,
but like mortgage delinquencies is doing so at a slower rate. Housing starts have dropped from the
promising numbers seen at the beginning of the year, and consumer spending
remains weak. F. J. Guarrera, vice
president of the company's financial services division said "The economic peaks
and valleys that we experienced during the quarter will most likely continue
into the first half of 2010."
Guarrera
said that it is a positive sign that increases in mortgage delinquency rates
appear to be slowing but we must keep things in perspective. He said until the housing market "can
consistently demonstrate several months of home value appreciation and the
unemployment rate improves, mortgage delinquency will likely continue to
rise. Many of these delinquencies in
places like Nevada, California, and Florida will result in foreclosures,
potentially keeping home values depressed in these areas."
The
company predicts that delinquencies will fall just short of 7 percent by year's
end. TransUnion's third quarter
predictions were slightly above actual figures but the company does not see
national delinquency rates beginning to fall until the first half of 2010.