The long, steady recovery from the housing crisis and the recession that followed is nearly over, with the consumer lending market, including mortgages, expected to recover completely in 2016, according to a new report from TransUnion.
TransUnion published its 2016 forecast for the mortgage market this week, and the report states that the mortgage market will return to its pre-crisis state by the end of 2016.
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According to TransUnion’s analysis, the national mortgage loan serious delinquency rate, which is the ratio of borrowers 60 or more days past due, will decline from 2.5% at the end of 2015 to 2.06% at the conclusion of 2016.
Consumer level mortgage delinquency rates peaked at 6.94% during the first quarter of 2010 and have been declining nearly every quarter since, TransUnion’s report showed.
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And the delinquency rate is expected to drop to 2.5% by the end of this year.
TransUnion’s 2016 projection is that the year-end delinquency rate will sit at 2.06%, much more in line with the pre-crisis delinquency rate.
“We have observed that a ‘normal’ delinquency rate falls between 1.5% and 2% in the past, and our forecast puts the nation back at this level,” said Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit.
“Newer vintage mortgage loans have been performing at this level for the last few years, but a combination of factors such as the funneling of bad mortgage loans through the foreclosure process, an improvement in the employment picture and an uptick in housing prices were needed to get back to normal,” Chaounki continued.
TransUnion’s forecast also projects continued growth in the average mortgage debt per borrower, which has slowly gained in recent years, due in part to a rebound in housing prices.
“This is a clear indicator that housing prices are recovering and consumers are gaining access to more mortgage loans,” said Chaouki. “Fannie Mae’s recent announcement to use trended data in the assessment of mortgage applicants could also very well boost mortgage originations in the second half of 2016.”
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