Forecast: Mortgage Delinquencies to Fall in 2010
This is an intriguing forecast out of TransUnion in the FT:
“The proportion of US borrowers who have slipped behind on mortgage payments will fall in 2010 for the first time since the financial turmoil began in a sign that the nation’s housing crisis is abating, the credit bureau TransUnion forecasts on Tuesday . . .
After studying 27m consumer records, TransUnion predicts that the rate of mortgage delinquencies – the ratio of borrowers who are 60 or more days behind on payments – will peak in early 2010 before falling towards the end of the year.
In the third quarter of 2009, delinquencies hit 6.25% of mortgages – about three times the historical norm. They are estimated to reach 6.56 per cent at the end of this year, and then settle at 6.39% in 2010, the Chicago-based group forecasts, as unemployment falls, house prices rise and subprime loans are renegotiated or expire.”
I do not agree with this forecast, but it would be a huge boost if it turns out to be true: Not only a boost for the economy, but a huge help for the banking sector, which has only seen modest incremental improvements . . .
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UPDATE: December 8, 2009 11:42am
It seems that TransUnion made pretty much the same forecast last year, and it was wrong.
Of course, nearly every forecast made prior to the Lehman faceplant was wrong:
Forecast: “The national 60-day mortgage delinquency rate among mortgage borrowers is expected to continue to rise throughout 2008 from a value of 3.53 percent in the second quarter of 2008 to just over 4 percent by year end,” said Carson. “This is primarily due to the continued economic weakness in certain segments of the country combined with the continuing fallout of the mortgage crisis.
“However, TransUnion forecasts that later in 2009 the rise in mortgage delinquency rates will taper off as economic conditions improve and home prices begin to stabilize. As far as state projections go, Nevada (8.7 percent) is anticipated to experience the highest average delinquency rate by the end of 2008, while North Dakota (1.3 percent) is expected to show the lowest level of delinquency. (Emphasis added)
Never mind . . .
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Sources:
US mortgage delinquencies to fall in 2010
Francesco Guerrera and Helen Thomas
FT, December 7 2009
http://www.ft.com/cms/s/0/183966d2-e366-11de-8d36-00144feab49a.html
TransUnion.com: Mortgage Loan Delinquency Rates Rise for the Sixth Straight Quarter
Sep 08, 2008
http://newsroom.transunion.com/index.php?s=43&item=490
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December 8th, 2009 at 7:06 am
Uh, oh. Even Berry is increasingly posting bullish news. It might be time to close all hatches and prepare for the next crash.
December 8th, 2009 at 7:22 am
NOTE: I wrote I disagreed with their assessment . . .
December 8th, 2009 at 7:29 am
Once again, moving backwards more slowly is the new moving forward.
December 8th, 2009 at 7:57 am
Nothing about the methodogy given. Is it once again some economist with no grasp of science running a regression on a time series and thinking it has predictive power?
On an anecdotal level, it’s amazing how many for sale and for rent signs there are in Houston. I wasted a couple of hours sunday morning looking through listings and foreclosures. There are still people who want $300+/sq.ft. when other houses in the neighborhood are going for $150 t0 $200 and you can even rent for much less a nearby house that apparently couldn’t be sold. This is a real triumph of hope over reality; it’s probably what they need to pay off the huge HELOC’s they took out or the unrefinanciable ARM they used to buy the property during the bubble.
I think many are keeping up their notes by drawing down savings and retirement and it has to stop at some point.
Thee are some real signs of desparation. I think the best is over on the Buffalo Speedway here in Houston. It runs through an area where builders are still asking $1,000,000 for spec McMansions that are too big for what was a very nice upper middle class neighborhood. There is one house with three large hand-painted plywood signs facing the Speedway. All they say is “FOR SALE.”
December 8th, 2009 at 8:12 am
One set of the perversities of this economy has to do with the homeowners who stopped making mortgage payments and are living rent free and the landlords who stopped making payments but are still collecting rents.
Thus these people are experiencing a sizable temporary surge in their consumer discretionary income while the dockets are clogged and foreclosure proceedings are delayed.
Thus it would seem that consumer demand could face another headwind once the foreclosure mess is worked through.
Yet another consequence of a society that believes that everyone has a right to game the system. In Afghanistan it may not be “the beginning of the end”, but for our society it certainly looks that way.
December 8th, 2009 at 8:14 am
There are no jobs and too much debt. Housing is still way too expensive. There is no chance housing bottoms in 2010.
December 8th, 2009 at 8:23 am
My head is going to implode.
Too much conflicting information, too much bullshit from too many quarters, facts changing by the hour, over the top mistakes—this is what it must be like to be a steelie in a pinball machine.
I just want everyone to get along. A thousand points of light, ‘n all that.
December 8th, 2009 at 8:29 am
flipspiceland Says: I just want everyone to get along. A thousand points of light, ‘n all that.
But no change that you can believe in?
December 8th, 2009 at 8:31 am
“It doesn’t matter until it matters.” When will that happen again? Is it only at times when the Fed yanks the punch bowl? Otherwise, we keep seeing an alternate reality.
The Bizgov ™ just keeps bending the spoon. Over and over. Some people still see the original shape. TransUnion sees a spork.
December 8th, 2009 at 8:43 am
Here in economically challenged rural Michigan (a large ag area) a few observations:
1) Low end houses (anything south of $100,000 including those selling for $10,000 or so)
are moving. This is largely based on info from friends in the business.
2) Still lots of houses for sale. Prices are going down fast. Rents are dropping.
3) Lake property is moving again (at least there are a lot fewer for sale signs on lake property)
4) The people renting houses in this area are truly hurting. Medical bankruptcies are the norm, in fact close to 100%. Collections, many with no jobs, really ugly situation.
5) State and local governments are just starting to feel the drop in income/taxes. There is a lag built into the system where values change a lot faster than property tax income.
6) Falling population, schools shrinking, lots of empty houses, local governments just starting to cut.
7) So far the ag economy has been spared the hard blows received by the rest of the economy. Although there are a few signs of shrinking credit availability for example local dairy farmers are loosing their credit lines.
8) One local big pharma manufacturing plant is doing well and hiring. They are about the only major employer in the area that hasn’t cut wage/benefits drastically. Although even they have made things economically tougher on the employees by raising medical premiums and making it much harder to retire. Relatively speaking it is by far the best place to work say within 50 miles. Even for this company the vast majority of the investment capital is going…….. over seas because that is where the growth is. Sign of things to come.
9) U6 in this area is north of 20%.
It doesn’t feel like there are a lot of green shoots in this part of the world.
May you live in interesting times.
December 8th, 2009 at 8:44 am
Flipping Real Estate is back…
http://online.wsj.com/article/SB126022588878780861.html?mod=igoogle_wsj_gadgv1&
…according to the WSJ front page (recall here the idea is to give emotional fodder to subscribers.)
December 8th, 2009 at 9:16 am
@farmera1: My heart goes out to you guys. Michigan needs a lucky break.
December 8th, 2009 at 9:20 am
“A thousand points of light, ‘n all that”
been there .. done that (slave labor)
that helps the bottom of the diamond when you buy their stuff to do anything with
and the bottom diamond saw the outsource’g light
I’m now surrender’g but not give’g myself away
/
on the flipside (for the kids) .. but I had/having .. ya “Hell of a Vision”
December 8th, 2009 at 9:52 am
@Mike in Nola: I’m amazed by how many “For Rent” signs (and BIG ones too, like it’s being shouted to every passerby, as if people can’t already see the normal-sized ones) there are in my neighborhood alone. That tells me the Feds have succeeded in sucking the renter/first time home buyer and distressed property buyer/investor into the market, which is distorting the rental market, creating a glut of rentals on the market. That is pushing rental prices down, which will then pull down home values with it (eventually). Ah, the distortions and unintended consequences are a beautiful thing, aren’t they?
December 8th, 2009 at 9:53 am
@VD: It’s most definitely back here in the TC, but I wonder for how long. I don’t think it will be very long before this latest round of knife-catchers loses their shirts, which will then put an end to this little quick money-grabbing enterprise.
December 8th, 2009 at 10:34 am
Simple observation of the Trans Union report – for this information to have any shred of accuracy, would it not be true that mortgage holders (banks) would need to REPORT the late payment beyond 60 days? If a bank wants to “cook-the-books” even a little, they simply stop reporting late payments? This whole article seems a bit suspicious. Just a thought…
December 8th, 2009 at 10:55 am
differently, reports like this one, out of TransUnion, would do Stalin-era Pravda proud..
“Tractor production exceeds five-year Plan…”
December 8th, 2009 at 11:43 am
http://www.thetruthaboutmortgage.com/mortgage-delinquencies-rise-should-taper-off-in-2009/
December 8th, 2009 at 4:40 pm
Thanks CG
Updated above