Mortgage delinquencies in U.S. hit record high in third quarter
The rise was the 11th straight quarterly increase in the number of households delinquent on mortgage payments, TransUnion said. Being two months behind is traditionally viewed as a precursor to foreclosure as homeowners by that time find it difficult to make up overdue payments. Year-over-year, the rate was up about 58%, from slightly less than 4%.
But there was a glimmer that things may be improving, as the rate of rise continued to ebb. The delinquency rate rose 7.6% in the third quarter, but that was less than the 11.3% rate recorded in the second quarter and the 14% jump seen in the first three months of the year.
Still, though the increase in mortgage delinquency rates has slowed for three consecutive quarters, it has to be viewed in perspective, said F. J. Guarrera, vice president of TransUnion's financial services division. The rate continues to rise and are expected to peak at record levels, he said in a statement. "Until the housing market can consistently demonstrate several months of home value appreciation and the unemployment rate improves, mortgage delinquency will likely continue to rise."
States with the highest rates of delinquency continued to be those hardest hit by the housing bubble. Nevada had the highest rate, with 14.5% of households past due on mortgage payments, while Florida recorded a 13.3% rate. Arizona saw its rate hit 10.4%, and California, home to the nation's largest housing market, rose to 10.2%, according to TransUnion's database of 27 million consumer records.
Delinquencies in these states will likely result in foreclosures, Guarrera said, "potentially keeping home values depressed in these areas."
North Dakota, South Dakota and Vermont, at 1.7%, 2.3% and 2.6%, respectively, had the nation's lowest delinquency rates, TransUnion said.
The company's forecast calls for the national rate to hit just short of 7% by the end of the year. TransUnion doesn't foresee the rate of delinquencies beginning to fall until the first half of next year, Guarrera said, "until the stabilization of housing prices makes solid traction across the U.S."
As with other areas of the economy, however, that isn't likely to happen before unemployment rates begin to fall and companies once again begin to hire. And few economists see that happening much before the end of 2010.