TransUnion, one of the nation's major credit reporting bureaus forecasted today that one of the   primary consumer credit variables -- mortgage delinquency rates - will continue to decline through 2013 while the other - credit card delinquencies will increase slightly. 

The ratio of borrowers 60 or more days past due on their mortgages is projected to decline to 5.06 percent by the end of 2013 from an estimated 5.32 percent at the conclusion of 2012. TransUnion forecasts mortgage delinquencies, a statistic generally considered to be a precursor to foreclosure, will decline in 34 states and the District of Columbia with only 13 states experiencing increases.

Mortgage delinquencies peaked in the fourth quarter of 2009 at 6.89 percent.  This marked the 12^th consecutive quarter that rates rose, starting at 1.94 percent in the fourth quarter of 2006.  This was an unprecedented 255 percent increase in three years.  The return to normal levels has been much less dramatic and nearly three years after that peak delinquency rates have only dropped 21 percent to 5.41 (Q3, 2012) and, if the TransUnion forecast holds, will only have dropped about 27 percent by the end of 2013 and would still be well above the "normal" range of 1 1/2 to 2 percent.  

"The slow improvement pace we are experiencing right now seems to be less about new borrowers not being able to make their payments and more about existing borrowers who have been delinquent for a very long time," according to Tim Martin, TransUnions group vice president of U.S. Housing. "For example, our analysis shows the delinquency rate would fall to around 2.5 percent, or pretty much normal, if we simply took borrowers who haven't made a mortgage payment in over a year out of the calculation. By comparison, pre-recession, it was unusual for a borrower to go more than 6 months without either being able to cure their situation or go through the foreclosure process.

"While we are encouraged by the direction of the forecast," Martin said, "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."

The ratio of credit card holders 90 or more days delinquent on one or more cards is expected to remain relatively low throughout 2013, increasing slightly from 0.83 percent in the fourth quarter of 2012 to 0.87 a year later.  Between 2000 and 2011, the credit card delinquency rate has averaged 1.24 percent during the fourth quarter. In the 51 quarters since Q1 2000, the rate has only been below the 0.90% threshold 10 times. 

Credit card debt per borrower, which has been relatively low since 2010, is expected to rise in the next year from its Quarter 3 level of $4,996 to $5,050 in Q4 2012 and $5,446 at the end of 2013. This would be the highest credit card debt level since 2009. Average credit card debt per borrower peaked at $5,776 in Q1 2009.