TransUnion Issues Annual Consumer Credit Forecasts: Improved Mortgage and Credit Card Delinquencies Expected by End of 2010
CHICAGO, Dec. 8 -- TransUnion released its annual credit forecasts today, which indicate national mortgage loan delinquencies (the ratio of borrowers 60 or more days past due) will drop nearly 3 percent by the end of 2010 to 6.39 percent from an expected 6.56 percent at the conclusion of 2009. The projected decrease in mortgage delinquencies would end a trend that included unprecedented year-over-year increases of 54 percent between 2006 and 2007, 53 percent between 2007 and 2008 and 43 percent between 2008 and 2009.
TransUnion also released national year-end 2010 credit card delinquency rate forecasts (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) that indicate the nation will experience a third straight year-over-year decrease from 1.07 percent at the end of 2009 to 1.04 percent at the conclusion of 2010. The projected 2.80 percent year-over-year decrease is significantly less than the 11 percent and 11.6 percent drops seen between 2007 and 2008 and 2008 and 2009, respectively. However, the expected year-end 2010 delinquency rate marks a 23.6 percent decrease from the same period in 2007 (1.36 percent).
"We believe the nation will see a turnaround in mortgage delinquencies in the coming year," said Ezra Becker, director of consulting and strategy in TransUnion's financial services group. "Tied directly to anticipated unemployment rates and housing values, the decrease in delinquencies should be gradual. "This is a dramatic shift from the 43 to 54 percent year-over-year increases we have seen the last three years. We expect this change to be driven in part through the continued conservative approach lenders are taking to new loan underwriting, as many of the existing mortgages in the market work their way out of the system and off the books of lending institutions."
"We anticipate that credit card delinquencies will decrease for the third straight year as consumers continue to keep incremental debt to a minimum and aggressively manage debt repayment. However, the decrease is projected to be smaller than in previous years, indicating that this might be the best consumers can do in managing delinquencies in the current economic environment. It will be interesting to see how the CARD Act, primarily taking effect in February 2010, will impact both consumer and lenders," added Becker.
Though the projected rate of decrease in mortgage delinquencies will be relatively slow for a majority of the nation, 22 states are expected to experience double-digit decreases in delinquency as housing values in those states are forecasted to improve. The states with the greatest decrease in mortgage delinquencies are expected to be North Dakota (-17.93 percent), Minnesota (-15.00 percent) and Oklahoma (-14.42 percent). Five states are expected to see increases in mortgage delinquencies, including Florida (17.34 percent increase), Arizona (6.26 percent increase), California (0.93), New York (0.43) and Virginia (0.37).
Florida is expected to have the highest mortgage delinquency rate by the end of next year at 16.86 percent, followed closely by Nevada at 16.14 percent. North Dakota (1.43 percent), South Dakota (2.20 percent) and Nebraska (2.35 percent) should have the lowest delinquency rates.
On the credit card front, Arizona is the only state that is expected to see an increase in delinquencies next year, though a very minimal one from 1.33 percent in Q4 2009 to 1.34 percent in Q4 2010. Eleven states will see 4 percent or greater decreases in credit card delinquencies, led by Washington D.C. (-8.24 percent), Mississippi (-6.15 percent) and Rhode Island (-4.94 percent).
Nevada (1.91 percent), Florida (1.40 percent) and Arizona (1.34 percent) will have the highest credit card delinquency rates at the end of 2010, while North Dakota (0.61 percent), South Dakota (0.65 percent) and Alaska (0.67 percent) are expected to have the lowest levels.
Current mortgage and credit card delinquency data for the nation and every state can be found at www.transunion.com/trenddata.
TransUnion's Trend Data database
The source of the underlying data used for this analysis is TransUnion's Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion's national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels.