American homeowners might be getting better at paying their mortgage—at least second quarter results make it seem that way.
Q2 of 2017 reflected the lowest delinquency rates since the recession, according to a recent report by Transunion, dropping below 2 percent for the first time in almost 10 years. In Q2 2017, the rate came in at 1.92 percent, which was down from 2.30 percent in Q2 of 2016. Joe Mellmen, SVP and Mortgage Business Leader for TransUnion explained since delinquency rates reached 7 percent in the recession, rates have had more trouble recovering.
“We’re now at the lowest delinquency levels in nearly a decade, and we anticipate those levels will remain low through the rest of this year,” Mellman said.
As far as the risk associated with mortgage originations in the second quarter of 2017, over 83 percent were in the prime and above risk tiers. They remained relatively steady, according to the report, rising slightly from 1.46 million in Q1 2016 to 1.49 million in Q2 of 2017. On average, account balances declined 1.6 percent from $223,262 in Q1 2016 to $219,743 in Q1 2017.
“Average new account balances tend to be larger for refinance transactions as opposed to purchase transactions, because consumers with higher loan amounts can realize greater benefits from lowering interest rates and/or loan term extension,” said Mellman. “As interest rates rise, refi activity declines. This year, we have observed that reduction, leading to lower average new account balances.”