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Mortgage and Credit Card Delinquency Rates Predicted to Decline.

TransUnion released its annual forecasts today on consumer credit, which indicate that national mortgage loan delinquencies (the ratio of borrowers 60 or more days past due) will drop nearly 20 percent by the end of 2011 to 4.98 percent from an expected 6.21 percent at the conclusion of 2010. The projected decrease in 60-day mortgage delinquencies, a statistic generally considered a precursor to foreclosure, would more than double the 9.87 percent yearly decline that is expected between the end of 2009 and 2010 (from 6.89 percent to 6.21 percent). This is a welcome contrast to the year-over-year increases of 54 percent between 2006 and 2007, 53 percent between 2007 and 2008 and 50 percent between 2008 and 2009.

TransUnion is projecting double-digit declines in mortgage delinquencies for every state and the District of Columbia through 2011. Interestingly, the states projected to experience the greatest decreases in mortgage delinquencies — Nevada (-24.77 percent), Arizona (-24.27 percent) and Florida (-23.90 percent) — are the same areas expected to have the highest 60-day mortgage delinquency rates at the end of next year (Florida — 11.06 percent; Nevada — 10.87 percent; Arizona — 7.59 percent).

North Dakota (1.12 percent), South Dakota (1.80 percent) and Nebraska (2.05 percent) should continue to rank among the states with the lowest delinquency rates at the end of next year.

“We believe the nation will experience an improvement in mortgage delinquencies during 2011,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit. “This will be driven by a slowly improving unemployment picture and continued stabilization in housing prices. While there is continued price pressure in many markets, we expect a growing number of areas of the country to experience a rise in property values along with some stabilization of values in those states and markets hardest hit by the recession.”

TransUnion also released national year-end 2011 credit card delinquency rate forecasts (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards) that indicate consumers will experience a 10.67 percent decline from a projected 0.75 percent delinquency rate at the end of 2010 to 0.67 percent at the conclusion of 2011. The projected 90-day credit card delinquency rate at the end of 2011 would mark a 50.7 percent drop from the beginning of the Great Recession (1.36 percent in Q4 2007) and constitute the lowest number since 1995.

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“Seasonality aside, the percentage of bank card borrowers delinquent on one or more bank-issued, general-purpose credit cards is expected to continue to decline generally through 2011, reaching levels not seen in more than a decade,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. “Many factors have influenced the way consumers view and utilize credit card credit, including the Credit CARD Act, which has shifted the way lenders market and price this instrument; the payment hierarchy flip consumers displayed this past year — paying credit card bills before their mortgages; dramatic increases in the volume and duration of unemployment; and of course, home value depreciation.

“For 2011, TransUnion does not expect to see any material change in the mindset of consumers. Although the economy is expected to improve, in the short term consumers are likely to continue to view their credit cards as instruments to get them through difficult financial straits, so we expect they will continue to utilize them prudently.”

Every state is expected to see further declines in 90-day credit card delinquencies in 2011, led by Mississippi (-13.67 percent), North Carolina (-13.09 percent) and Kentucky (-12.88 percent).

Nevada (1.08 percent), Florida (0.90 percent) and Mississippi (0.82 percent) should have the highest credit card delinquency rates at the end of 2011, while North Dakota (0.38 percent), South Dakota (0.43 percent) and Nebraska (0.44 percent) are expected to have the lowest levels.

The most current mortgage and credit card delinquency data for the nation and every state can be found at

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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