Barring another setback in the US economy, TransUnion said mortgage delinquencies in the country should decline significantly by end 2012.
According to the credit reporting agency, the mortgage delinquency rate —the ratio of borrowers 60 days or more behind on their payments — will likely reach up to six percent through the first half of 2012.
However, it noted that the rate could drop to five percent by end-2011, significantly lower than the 6.89 percent peak in Q4 2009.
“Although house prices and unemployment will likely face continued pressure next year, this forecast calls for gradual improvements in the second half of 2012 to other key variables, like improving credit quality of new originations, consumer confidence and GDP, that will positively influence homeowners’ ability and willingness to pay their mortgages,” said Tim Martin, Group Vice President of US housing in TransUnion’s financial services business unit.
While the decline will be significant, delinquency rates will remain well above the pre-recession average of between 1.5 and two percent.
Related Stories:
UK mortgage approvals on the rise
Aussie mortgage applications up
US fixed mortgage rates remain low