The rate of homeowners 60 days or more delinquent on their mortgages has dropped below 4 percent nationally for the first time since 2008, according to TransUnion of Chicago.
The mortgage delinquency rate declined for the eighth consecutive quarter to 3.85 percent at the end of the fourth quarter of 2013 from 4.09 percent at the end of the previous quarter on Sept. 20, 2013. The delinquency rate at the end of the final quarter of 2013 was more than 24 percent lower than the 5.08 percent recorded at the end of the fourth quarter of 2012.
The rate of Iowa homeowners 60 days or more delinquent on their mortgages dipped to 2.34 percent on Dec. 31, 2013, from 2.38 percent at the end of the third quarter on Sept. 30, 2013. The fourth-quarter 2013 delinquency rate compared very favorably with 2.85 percent at the end of the final quarter of 2012.
TransUnion, which tracks data and trends in the consumer lending industry, said all 50 states and the District of Columbia experienced a decline in the mortgage delinquency rates on a year-over-year basis. Only two states — New Jersey and New York — did not record double-digit percentage declines in delinquency rates.
While the drop below 4 percent is an encouraging sign for the housing market, Steve Chaouki, head of financial services for TransUnion, said mortgage delinquencies continue to be twice as high as levels recorded before the housing bubble began.
“The housing market also still shows some volatility, with both housing prices and mortgage originations dropping in the latter part of 2013 after experiencing improvements in the first part of the year,” Chaouki said.
“New account originations have declined significantly in recent quarters. This is primarily related to recent spikes in interest rates, particularly in the refinance market.”
Chaouki said continuing tight lending standards also remain a factor in some sectors of the market.
TransUnion is forecasting that the consumer delinquency trend will continue to move lower into the first quarter of 2014, with mortgage delinquencies falling to about 3.7 percent by the end of March.
“Mortgage loans originated in the last few years have significantly higher credit quality than those originated prior to the recession, with delinquency rates that resemble those seen seven to 10 years ago,” Chaouki said. “As older mortgages continue to slowly leave the system, the industry will experience continued declines in overall mortgage delinquencies.”