TransUnion, Chicago , released its 2014 forecast for mortgage and credit card markets on Dec. 12 and the company expects the national mortgage delinquency rate to drop for the fifth straight year. The company expects the rate to fall to 3.75 percent by year-end 2014, from an estimated 3.94 percent by the end of 2013. The rate of decline in the mortgage delinquency rate that's projected for 2014 slowed for the first time since 2010. The drops in the national delinquency rate went from a decline of 6.4 percent in 2010 to a drop of 7.14 percent in 2011, to a decline of 15.05 percent in 2012 to a projected decline of 23.43 percent in 2013. In 2014, the national delinquency rate is expected to decline by 4.82 percent. That compares with massive increases in the national delinquency rate that occurred in both 2008 and 2009, when the rate rose each year by almost 50 percent, according to TransUnion. "TransUnion expects the national mortgage delinquency rate to continue its downward trend, though we see a few obstacles in 2014 that will limit the decline and keep it well above 'normal' levels," said Tim Martin , group vice president of U.S. housing in TransUnion's financial services business unit. Martin added, "The primary reason for the slowdown will be the pending rise in interest rates, which may hinder home sales while also blocking refinancing as an exit strategy for some mortgage borrowers. Additionally, foreclosure timelines continue to expand in many states, keeping longer-vintage delinquencies in the system." Subprime delinquency rates remain high, according to the TransUnion data. In a press release, the company said that while overall mortgage delinquencies have dropped nearly 41 percent from their peak period through the third quarter of 2013, subprime borrower delinquencies have dropped only about 15 percent from the first quarter of 2010 to last year's third quarter. Martin said, "The encouraging story surrounding subprime delinquency rates is that most of the decline observed has occurred since the beginning of 2012. As interest rates stayed low, house prices started to rebound-and that gave many subprime borrowers the option of refinancing or selling their way out of the delinquent mortgage before the log-jammed foreclosure process caught up to them." TransUnion identifies subprime borrowers as those with a VantageScoreŽ credit score lower than 640 on a scale of 501 to 990. TransUnion said that the mortgage loan delinquency rate in most states peaked in late 2009 and early 2010. Since that time, it has dropped nearly every quarter with exceptions coming in the third and fourth quarters of 2011. The company is projecting the largest declines in delinquency rates to occur in the following states: Nevada down by 25.17 percent; Florida down by 15.31 percent; Georgia down by 11.74 percent; Michigan down by 10.18 percent; and New Jersey down by 10.17 percent. The biggest increase in projected delinquency rates is expected in North Dakota (up 47.72 percent), Montana (up by 12.05 percent), Alaska (up 11.70 percent), Hawaii (up 7.35 percent) and Texas (up 7.33 percent). The rate of decline in the mortgage delinquency rate that's projected for 2014 slowed for the first time since 2010.
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