Mortgage Delinquencies Drop 14 Percent in Past Year- More Non-Prime Borrowers Getting Home Loans

Mortgage Delinquencies (borrowers that are 60 days or more late on their house payment) declined in the 4th quarter of 2014 marking the 12th consecutive quarter of declines in the mortgage delinquency rate, according to data just released by TrasnUnion.  As the table below shows, the mortgage delinquency rate for the 4th quarter of last year was 3.29%, a decline of 2.1% from the quarter before and a decline of 14.5% from the 4th quarter of 2013.

Foreclosures and better borrowers are the reason…

Ezra Becker, vice president of research and consulting at TrasnUnion,  said the improvement in mortgage delinquencies are driven “primarily by the ongoing clearance of the foreclosure backlog” and also notes that recent borrowers “have been performing exceptionally well“.

Young borrowers show best improvement….

Although mortgage delinquencies improved for all age groups, the youngest group (age 30 and under) had the largest improvement from a year ago with the mortgage delinquency rate dropping to 2.21% for 4th quarter 2014, a 24.3% decline from a year ago when the delinquency rate was 2.92%.

More home loans to “Non-Prime” borrowers…

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One of the problems that arose after the bubble burst was that lenders tightened down so much it was difficult for all but the very best borrowers to obtain a home loan however, as lending standards have been relaxed somewhat to more reasonable ones, we are seeing an increase in “normal” borrowers in the market.   This was well represented in TransUnions report as they reported that 27.8% of the new loan originations during the 3rd quarter of 2014 were to “Super Prime” borrowers, a decline of over 13% from the 3rd quarter of 2013 and “Non-Prime” loans increased over 15% during the same period with non-prime borrowers accounting for 16.7% of all borrowers during the 3rd quarter 2014, up from 14.5% a year ago.