The national mortgage delinquency rate (the rate of borrowers 60 or more days past due) in Q1 2013 dropped 21 percent versus last year; and now stands at 4.56 percent. Since last quarter, the mortgage delinquency rate declined 12 percent. Both on a year-over-year and quarter-over-quarter basis, this is the best improvement in mortgage delinquency since TransUnion began observing the data point in 1992.
"We are pleased to report that the national mortgage delinquency rate experienced its first major decline since the advent of the housing crisis," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. "We certainly expected improvement this quarter, as the housing sector is in recovery, but the magnitude of the improvement was unexpected."
Every state and the District of Columbia experienced improvement in their mortgage delinquency rates from last year. While Arizona (-37.9 percent) and California (-36.6 percent) led the way once again in terms of mortgage delinquency improvement, other states also saw marked declines. These included Colorado (-28.5 percent), Michigan (-28.1 percent) and Minnesota (-25.7 percent). Florida, one of the hardest hit states by the housing crisis, also saw a 20.7% yearly decline.
At a more granular level, 91.0 percent of MSAs experienced a yearly decline in their mortgage delinquency rate. This percentage was an improvement over the previous quarter when 81.4 percent of MSAs had a yearly drop in their mortgage delinquency rate. California was represented by 15 of the 25 MSAs that experienced the largest yearly mortgage delinquency declines. Notable California MSAs include: San Jose (-44.3 percent), San Francisco (-39.2 percent), San Diego (-38.4 percent) and Sacramento (-36.6 percent).
"The housing sector as a whole has definitely been improving with prices up, negative equity down and rates staying low," Martin said. "That seems to have helped borrowers this quarter, some of whom have been delinquent for a rather long time, work their way out of the system at a faster pace."
TransUnion expects the mortgage delinquency rate to continue its downward trend in the second quarter of 2013, finishing near 4.5 percent.
"There is no reason to believe the decline in mortgage delinquencies will not continue," said Martin. "All housing data point to further improvements in the delinquency rate, though as in the past few years, this also will hinge on how quickly older vintage loans clear through the system. We do not know if the first quarter was a blip, or if it's the beginning of a more rapid decline."