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Mortgage Delinquency Reaches Plateau

delinquent-noticeTransUnion, a credit information service, released a report, Q4 2016 Industry Insight Report, on credit service trends for 2016. They found that in 2016 alone, 12 million consumers gained access to credit services such as personal loans, mortgages, auto loans, and credit cards.

Across the board, consumers are gaining access to credit products like mortgages at a faster rate.  Nidhi Verma, senior director of research and consulting in TransUnion’s financial services business unit says “The consumer credit market performed well at the end of 2016. Total balances rose across every credit product in the fourth quarter following a strong shopping season. For the past several years, auto lenders have been responding to the pent-up demand in the subprime risk tier, and card issuers have been competing for share of wallet. Lenders are issuing more credit, and consumers are using that credit. As a result of this conscious effort to relax underwriting, we have observed higher, although still well controlled, credit card and auto delinquency rates over time.”

The mortgage delinquency rate is showing signs of plateauing, concluding 2016 at 2.28 percent. Mortgage delinquency has declined every quarter since Q3 2013 (4.31 percent). Delinquency rate dropped 7.3 percent last year, but remained unchanged from Q2 2016 to Q3 2016 (2.30 percent to 2.29 percent).

In addition, mortgage originations and average mortgage balance saw growth in 2016. Originations reached 2.23 million in Q3 2016. In Q4 2016, he average mortgage balance reached a post-recession high of $194,415. Joe Mellman, VP and mortgage business leader for TransUnion said “Originations have continued to grow across all risk tiers, which suggests lenders may be warming up to originating mortgages to non-prime borrowers, even though that share of the market remains small at under 4%.”

TransUnion’s experienced its own success in 2016. Total revenue for Trans Union in the fourth quarter was $436 million, a 13 percent increase. "TransUnion delivered a strong fourth quarter that caps an outstanding full year in 2016," said Jim Peck, TransUnion's president and CEO.

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