Drop in U.S. mortgage delinquency rates led by California, Arizona

Signs like this one in front of a home in Peoria, Ill., last month are getting to be a less common sight.
(Daniel Acker / Bloomberg)

WASHINGTON — Fueled by major improvements in California and Arizona, the percentage of homeowners nationwide who were behind on their mortgage payments dropped significantly in the three-month period ending in September compared with a year earlier, TransUnion said Tuesday.

The national mortgage delinquency rate — the percentage of borrowers 60 days or more late on their payments — fell to 5.41% in the third quarter from 5.88% in the same period in 2011, said TransUnion, one of the three major credit reporting companies.

The rate last quarter was the lowest since the first quarter of 2009, when it was 5.22%

Mortgage delinquencies also were down slightly in the third quarter of this year from the previous quarter’s rate of 5.49% , marking the third-straight quarterly decline. The report was another signal of a housing market recovery.

“Continued declines in mortgage delinquency rates are a welcome sign and reflect that relatively more homeowners are able and willing to make their mortgage payments each month,” said Tim Martin, group vice president of U.S. housing in the company’s financial services business unit.

But he said there was still “a long way to go” to get back to a more normal delinquency rate of 1% to 2%.

California and Arizona, two of the states hardest hit by the collapse of the subprime housing bubble, showed the best year-over-year improvement. Arizona’s delinquency rate was down nearly 25% from the third quarter of last year, to 5.62% from 7.46%. California’s rate dropped almost 24% to 5.56% from 7.29%.

Overall, 42 states showed a drop in their delinquency rates from a year ago. Just two states continue to have double-digit delinquency rates: Florida at 13.09% and Nevada at 10.93%. But both were improved from a year ago.

TransUnion expects delinquency rates to improve again in the fourth quarter because of the turnaround in the housing market.

“It’s generally tough to expect improvement in delinquency rates in the fourth quarter of the year given the extra demands on household income that many experience during the holiday season,” Martin said. “However, we saw some improvement in the housing market in the third quarter with regard to house prices, home sales and increased refinance activity, and we believe we will start to see these numbers reflected in improved mortgage delinquency next quarter.”


Measure of US home prices rises most in 6 years

Auto loan delinquencies fall to lowest rate on record

Housing affordability in California drops as prices increase

Follow Jim Puzzanghera on Twitter and Google+.