U.S. homeowners are getting better at making timely mortgage payments, a trend that reduced the late-payment rate on home loans in the first three months of the year by 24 percent from a year earlier, credit-reporting agency TransUnion said Wednesday.
The percentage of mortgage holders at least two months behind on their payments fell in the January-March period to 3.61 percent from 4.76 percent in the prior-year quarter, the firm said.
The first-quarter mortgage-delinquency rate is now back to where it stood in the second quarter of 2008, but remains above the low of 2.23 percent in the second quarter of 2007.
The latest rate also declined from 3.85 percent in the last three months of 2013.
The rate of late payments on home loans has been steadily declining over the past two years. At the same time, U.S. home sales and prices have been rebounding while foreclosures have been declining.
Homeowners have seen their finances shorn up by rising home values, an improving job market and efforts to restructure home loans so they’re more affordable. That has enabled them to make timely payments.
In addition, many of the risky home loans made before 2008 that went unpaid are no longer a factor, since the homes have been sold or foreclosed upon. Loans issued since then, after banks tightened lending standards, are less likely to go unpaid.
All told, all the states and the District of Columbia posted annual declines in their mortgage late-payment rate for the first quarter. California, Arizona and Nevada — foreclosure hotbeds in the aftermath of the housing bust — posted the biggest decline in their mortgage delinquency rate.
TransUnion expects that the late-payment rate on home loans will fall to 3.4 percent by the end of June. The forecast assumes the U.S. economy and job market will strengthen further, and that home prices will continue rising.