Arizona’s Mortgage Improvement Fastest in U.S.

Source: AZCentral.com
by Russ Wiles – May. 9, 2012 06:17 PM
The Republic | azcentral.com

Delayed mortgage payments are decreasing faster in Arizona than in any other state, indicates a new report. Arizona delinquencies on past-due home loans fell by one-fourth over the 12 months ending in March, reports credit-researcher TransUnion. That gave Arizona the nation’s best delinquency-improvement rate, though the percentage of past-due home loans here remains above the national average, TransUnion said Wednesday. Arizona’s mortgage-delinquency rate fell to 6.86 percent at the end of March, down from 9.14 percent one year earlier. The U.S. mortgage-delinquency rate also improved, falling to 5.78 percent at the end of March from 6.19 percent a year earlier. The new national rate is the lowest since the first quarter of 2009. TransUnion defines delinquencies as the percentage of borrowers who are 60 or more days past due and extracts the information from individual credit reports, about 27 million in total. Combined with other indicators such as rising home prices and declining personal bankruptcies, the delinquency report provides further evidence that the state’s economic recovery is continuing. For example, Phoenix home values rose 3.3 percent over the 12 months through February, the best performance among 20 large cities tracked by the Standard & Poor’s/Case-Shiller housing index. Arizona State University reported a 20 percent year-over-year home-price increase through March. Meanwhile, metro Phoenix and statewide bankruptcies have been falling for 15 straight months on a year-over-year basis. In April, for example, Valley filings were down 27 percent from April 2011. Also, national consumer delinquencies on credit cards and 10 other loan categories tracked by the American Bankers Association fell across the board during the most recent quarter — the first time that has happened in eight years. “You can’t get a better consumer-credit report card than this,” said the ABA’s chief economist, James Chessen, in a statement. Nationally, mortgage delinquencies tracked by TransUnion have been trending lower for three years, though they increased moderately in the third and fourth quarters of 2011. “While we are still about three times above the pre-recession norm, this should mark the start of consistent improvement each quarter,” said Tim Martin, a group vice president focused on housing in TransUnion’s financial-services unit. Arizona’s improvement largely reflects stable or rising home prices and a declining jobless rate, Martin said. The state also is coming down from a surge in bankruptcies. “It’s a very good story for Arizona,” Martin said. “Arizona started from a high base and has been showing improvement, and we expect it will continue to show improvement through the end of the year.” The Arizona delinquency rate, which started 2007 at just 1.45 percent, rose almost continuously as the Great Recession worsened, peaking at 11.33 percent in the fourth quarter of 2009, before reversing course over the past couple of years. TransUnion predicts mortgage delinquencies will continue to drift lower in 2012, as more homeowners are able to make payments. That forecast is based on assumptions about economic activity, consumer sentiment, unemployment rates, personal income, real-estate values and more. The forecast would change with unanticipated shocks to the economy or a renewed slide in housing prices, the company said. As another positive, Martin cited low interest rates and rising refinancing activity, including through the federal Home Affordable Refinance Program, or HARP. In addition to having the best mortgage-delinquency improvement rate, Arizona also has cut its housing debt notably. The average amount of mortgage debt here fell 3.3 percent to $196,300 over the past 12 months, said TransUnion. That was the second-largest debt decrease after a 6.2 percent decline in Nevada. Arizona’s housing debt peaked at about $220,200 in the first quarter of 2009.

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