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.