Mortgage Delinquencies to Decrease in 2017: TransUnion


Fewer delinquencies are expected to accompany higher debt levels in 2017, TransUnion predicted Wednesday.

TransUnion forecast that the share of mortgages that are 60 days or more delinquent will drop to 2.11% by the fourth quarter of 2017. The credit bureau also predicted that this delinquency rate would fall to 2.21% for the fourth quarter of 2016 versus a year ago when it was at 2.46%.

At the same time, TransUnion expects that average mortgage debt levels will rise to $194,875 for the fourth quarter of 2016 and $198,435 for the same quarter a year later. In the fourth quarter of 2015 average mortgage debt was $189,914.

“The rate at which mortgage delinquencies are expected to decline is expected to slow primarily because the inventory of foreclosure properties has diminished significantly and overall credit performance is stabilizing, as the bulk of consumers recently entering the mortgage market have high credit scores and have met stringent underwriting criteria,” said Joe Mellman, TransUnion vice president and mortgage business leader, said in a news release.

While the delinquency rate will continue to drop, Mellman cautioned against expecting a steep decline in the future since it is edging closer to historically normal levels.

Another factor driving the improvement in mortgage delinquencies is the relatively smaller share of subprime borrowers. In the third quarter of 2016, only 8.5% of consumers with a mortgage were subprime, down from 8.7% a year earlier and 15.5% during the same quarter in 2009.

TransUnion also predicted that improved economic conditions would lead to roughly 3 million first-time homebuyers coming to market in 2017.

“While increased interest rates will likely curtail refinancing activity materially and be a headwind for purchase mortgage affordability, we still see strong future purchase demand from prospective homebuyers,” Mellman said.

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