Credit reporting agency TransUnion released an exciting piece of news recently: the mortgage delinquency rate fell during the first quarter for the first time in 4 years. The rate of mortgage payments delinquent by 60 days eased to 6.77 percent, down from 6.89 percent in 2009’s last quarter.
What makes this news exciting is that the late payment rate has generally been an indicator of the direction of foreclosures.
“To see it turn down is a very, very strong sign,” said FJ Guarrera, vice president in TransUnion’s financial services business unit in an AP article. “We cannot characterize it as a trend yet, but we anticipate that things will continue to improve.”
In fact, TransUnion is forecasting another delinquency rate decrease for the next quarter, with the rate end up about 6. 3 percent by the end of the year. And the company sees the rate dropping down to around 5 percent by the end of 2011. (For a little perspective, the historically mortgage delinquency rate averages between 1.5 and 2 percent.)
By state, several states remain in the thick of the mortgage mess with Nevada posting a 15.98 percent late payment rate. Florida came in second with a rate of 14.65 percent. Arizona and California were next with rates of 10.94 percent and 10.68 percent, respectively.
TransUnion does not predict rates to drop anytime too soon for these hard-hit areas. “I really do believe it will take longer in those states for improvement,” Guarrera said.
The bare numbers may not explain the whole story, as many homeowners may have been applying early tax returns to their late mortgage payments, which would lead to only a temporary decrease in the rate. Still TransUnion believes this is the first step in a trend of declines, so we’ll take the good news at face value for now.