Fewer consumers are missing payments on their mortgages as the jobs market improves and home values rise.
The credit bureau TransUnion reported Tuesday that the mortgage delinquency rate (the rate of borrowers 60 days or more past due on their home loans) dropped 23.3 percent over the past year, ending the third quarter of 2013 at 4.09 percent.
The rate was at 5.33 percent in third quarter of 2012. The mortgage delinquency rate also dropped on a quarterly basis, down 5.3 percent from 4.32 percent in Q2 2013, the seventh straight quarterly decline.
All 50 states and the District of Columbia saw a decline in their mortgage delinquency rate between Q3 2012 and Q3 2013.
Five states — California, Arizona, Nevada, Colorado and Utah — saw 30 percent-plus declines in their mortgage delinquency rate. Three states — California, Florida and Nevada — had double-digit percentage drops in the last quarter.
“This isn’t a sample data set,” said Tim Martin, group vice president of U.S Housing for TransUnion’s financial services business unit. “We looked at all 52 million installment-based mortgages in the U.S. and the trend is clear — the percentage of borrowers willing and able to make their mortgage payments continues to improve.
The overall delinquency rate is still high relative to “normal.” But a 23 percent year-over-year improvement is “great news for homeowners and their lenders,” Martin added.
TransUnion recorded 52.31 million mortgage accounts as of Q3 2013, down from 54.23 million in Q3 2012. This variable was as high as 63.14 million in Q3 2008 — prior to the housing crisis.
TransUnion found that “non-prime” borrowers (those consumers with a VantageScore credit score lower than 700) continue to represent a smaller portion of all mortgage loans, more than 50 percent lower than in 2007. Non-prime borrowers constituted 5.82 percent of all new mortgage originations in Q2 2013.
In Q2 2008, non-prime borrowers represented 12.69 percent of the total.
TransUnion is forecasting that the downward consumer delinquency trend will continue in the final three months of 2013. The delinquency rate will likely be just under 4 percent at the end of the year.