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TransUnion: Mortgage Balances Begin to Rise; Delinquency Rate Drops for 12th Straight Quarter

The mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) declined for the 12th straight quarter to 3.29% at the end of Q4 2014, according to TransUnion’s latest mortgage report. The mortgage delinquency rate declined more than 14% in the last year (down from 3.84% in Q4 2013).

Average mortgage balances per consumer increased to $187,139 in Q4 2014, up from $185,496 in Q4 2013. It continues a recent trend of yearly growth, as this metric stood at $183,339 in Q4 2012. The greatest mortgage balance increases were seen in the super prime risk category, where balances rose approximately 3% in the last year.

“The mortgage delinquency rate continues to be well controlled as it slowly recedes to pre-recession levels, driven primarily by the ongoing clearance of the foreclosure backlog. More recent vintages have been performing exceptionally well,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “A bigger story this past quarter is the continued rise in mortgage balances. Much of this gain can be attributed to those consumers who took advantage of a low interest rate environment to purchase homes with jumbo mortgage loans. The share of these loans amongst all mortgage originations increased by 8% in Q3 2014 from 6.8% in Q3 2013 and 5.8% in Q3 2012.”

Average mortgage balances in Q4 2014 rose in all but two states—Wisconsin and Rhode Island—on a year-over-year basis. Every state and the District of Columbia experienced declines in their mortgage delinquency rates on both a quarterly and yearly basis in Q4 2014.

The largest yearly mortgage delinquency decline of major MSAs occurred in Miami (down 30.9%) as its 60-day mortgage delinquency dropped from 10.40% in Q4 2013 to 7.18% in Q4 2014. Declines in mortgage delinquency were found broadly, from Boston (down 12.8% from 3.08% to 2.69%) to Los Angeles (down 21.5% from 3.06% to 2.40%). “These are significant data points, because they show that mortgage delinquency rates continue to drop across the country—both in those markets with elevated delinquencies and in those that have already experienced major drops,” added Becker.

Delinquency rates dropped and mortgage debt levels rose for consumers of all age groups. The youngest subset (those ages 30 and under) experienced the largest yearly mortgage delinquency rate decline (down 24.3% from 2.92% in Q4 2013 to 2.21% in Q4 2014). Consumers under the age of 30 also saw relatively large debt-per-borrower increases, rising from $149,778 in Q4 2013 to $151,692 in Q4 2014. Average balances rose most for consumers aged 40-49, rising 1.6% from $212,877 in Q4 2013 to $216,201 in Q4 2014.

TransUnion recorded 53.2 million mortgage accounts as of Q4 2014, up from 52.9 million in Q4 2013. However, there are more than 6 million fewer accounts as compared to Q4 2009 (59.6 million). Viewed one quarter in arrears (to ensure all accounts are reported and included in the data), new account originations ticked up slightly in Q3 2014, increasing 7% quarter over quarter. In spite of this rebound, origination levels were still significantly lower than in Q3 2013 (down 20%).

The risk tier composition of mortgage originations continued to move away from super prime and into lower tier groups. The super prime share of originations was 27.8% in Q3 2014, down from 32.1% in Q3 2013. Conversely, the share of non-prime originations increased from 14.5% in Q3 2013 to 16.7% in Q3 2014.

“Despite more non-prime originations, we are seeing continued declines in the mortgage delinquency rate,” said Becker. “This points to the ongoing re-emergence of consumers prioritizing their mortgage payments, bolstered by an improving employment situation. We are in a far better position than we were immediately post-recession, and materially better than we were even one year ago.”

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards, and auto loans.

Q4 2014 Mortgage Statistics – Delinquency Rates

Quarter over QuarterQ3 2014Q4 2014Pct. Change
Year over YearQ4 2013Q4 2014Pct. Change
Mortgage Delinquency Rate for Select StatesQ4 2014
New York5.15%
Largest Year-over-Year DeclinesQ4 2013Q4 2014Pct. Change
Smallest Year-over-Year DeclinesQ4 2013Q4 2014Pct. Change
West Virginia3.11%2.95%(5.2%)

Q4 2014 Mortgage Statistics – Average Balance per Borrower

Quarter over QuarterQ3 2014Q4 2014Pct. Change
Year over YearQ4 2013Q4 2014Pct. Change
Mortgage Balance per Borrower for Select StatesQ4 2014
New York$219,951
Largest Year-over-Year IncreasesQ4 213Q4 2014Pct. Change
North Dakota$131,626$138,6985.4%
District of Columbia$358,664$368,6852.8%
Largest Year-over-Year DeclinesQ4 2013Q4 2014Pct. Change
Rhode Island$184,574$184,480(0.1%)

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