Mortgage, Credit Card Delinquencies Will Likely Drop Next Year

Credit unions can cautiously plan for a drop in late payments on home loans and credit cards by mid-2012, but not before a slight uptick.


Both mortgage and credit card delinquencies should decline in 2012, according to TransUnion’s forecast on consumer credit. However, both delinquency variables should see a rise through 2011 and the first quarter of 2012 before declining.

National mortgage loan delinquencies, which is the ratio of borrowers 60 or more days past due, are expected to decline to about 5% by the end of 2012 from nearly 6% at the end of 2011. After six consecutive quarterly declines between Q4 2009 and Q2 2011, 60-day mortgage delinquencies should rise through Q1 2012, peaking at 6%. Mortgage delinquencies — a statistic generally considered to be a precursor to foreclosure — should decline for the last three quarters of 2012, according to TransUnion.

The expected mortgage delinquency decline in 2012 would follow recent yearly trends, including an expected 7% decrease by the end of this year, and a 7% reduction in 2010. This is in contrast to more than 50% year-over-year increases between 2006 and 2009.

TransUnion is projecting 2012 declines in mortgage delinquencies for 38 states, with the largest percentage declines expected in Arizona (-46.25%), Wisconsin (-45.52%), and Colorado (-40.34%). Twelve states and the District of Columbia are expected to see increases.

On the credit card front, credit card delinquency rates, which is the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards, reached their lowest levels in 17 years during the second quarter of 2011 (0.6%), and TransUnion expects them to remain relatively low in 2012, decreasing approximately 7% from 0.74% in Q4 2011 to 0.69% in Q4 2012.

Thirty-nine states and the District of Columbia are projected to see credit card delinquency declines in 2012 with only 11 states experiencing increases. States expected to see the largest credit card delinquency declines in 2012 include Delaware (-30.74%), Oklahoma (-23.74%), and California (-22.97%). The largest increases are expected in Connecticut (14.87%), Missouri (12.46%), and Louisiana (10.11%).

TransUnion forecasts are based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates and real estate values. The forecasts would change if there are unanticipated shocks to the global economy affecting recovery in the housing market, or if home prices fall more than expected.

To learn more about TransUnion 2012 forecasts, contact David Dodson, Vice President of Credit Unions at TransUnion at or 312-985-3037.



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Dec. 12, 2011


  • Low as the credit card delinquency rate already is, there is some more room left for improvement, as indicated by the early-stage delinquency rate (30 - 59 days), which continues to fall and is now at 0.75 percent, the lowest rate ever. What's even more certain is that defaults will keep falling, as the charge-off rate is a trailing indicator for the delinquency one.