Mortgage Delinquencies Expected to Drop in 2011

The rate of mortgage delinquencies right now stands at about 6.2 percent. That number is quite high, but it is understandable when you consider the current economic climate. Some experts, however, are saying that the figure may drop in 2011.

TransUnion, one of the leading credit bureaus in the nation, released data earlier this week that states the rate of mortgage delinquencies may reach 4.98 percent by the end of 2011. In 2009, this level reached its peak at almost 7 percent. That was when mortgage lenders began to tighten its restrictions on offering credit to buyers who had dings on their credit or other factors that disqualified them from borrowing money to by a home.

However, with that good news comes some bad news. TransUnion also states that the number of homeowners who have fallen at least 60 days overdue on their mortgage payment will still be higher than it has been in the past. That number is expected to rise from 1.5 percent to 2 percent, which will be the highest it has been since the bureau began tracking these numbers in 1971.

Steve Chaouki, a group vice president of TransUnion’s financial services, says that the falling rate of delinquencies is a good sign for the mortgage industry. And while things are looking up, Chaouki says that the industry has a long way to go before being “out of the woods.”

In addition to mortgage delinquency rates falling, TransUnion’s data also predicts that credit card delinquencies are going to fall but at a slower rate. By the end of 2010, about 0.75 percent of credit card holders are going to be at least 90 days delinquent on one or more of their credit cards. By the end of 2011, that rate is expected to drop to 0.67 percent. Part of the reason that credit card companies have lower rates of delinquencies is because they can control their losses better than the mortgage companies can. For one thing, they can reduce the credit lines of their riskier customers, which is something mortgage lenders cannot do.

Things are really starting to look up for the mortgage industry these days after a tough few years. But there is still a long way to go.