Americans Are Starting to Miss More Mortgage Payments

For several quarters, lenders have been reporting low and falling delinquency rates for credit card, mortgage and auto loan borrowers, and that positive trend has opened up credit products to consumers with lower credit scores.

That may be starting to shift.

A greater share of mortgages were 30 to 59 days past due in the fourth quarter of 2013 than at the same time in 2012, and bank risk professionals expect credit card and auto loan delinquencies to follow suit.

Growing Concern

At the end of 2012, 2.05% of outstanding mortgages were at least 30 days delinquent, which was down from 2.39% in 2011. But at the close of 2013, the delinquency rate rose slightly, to 2.13%, according to data from the Experian-Oliver Wyman Market Intelligence Reports. Using Experian’s IntelliView tool to sort the data, the bump in delinquencies appears to be recent, as the 60- and 90-day delinquency rates remain below those of last year.

Problem Likely to Worsen

In a survey by FICO of bank-risk professionals, nearly half said they expect delinquency rates on all consumer loans to rise to their highest levels since late 2011. For credit cards, 44% of respondents expected delinquencies to increase, and 35% predicted auto loan delinquencies would jump.

“We’ve seen concerns about delinquencies creeping up for a few quarters,” said Andrew Jennings, FICO’s chief analytics officer, in a news release about the survey. “These numbers mean more people are gaining access to credit, but we need to keep a close eye on the risk levels of these new loans. If delinquencies reach an uncomfortable level, we may see lenders pull back again.”

IntelliView showed 30- to 59-day delinquency rates at 0.63% of outstanding credit card accounts and 2.49% of auto loans at the end of 2013. Each was up slightly from the previous quarter but down a bit from the year before.

The Problem With Delinquency

Payment history has a significant impact on your credit scores, which affect your ability to access other forms of credit and low interest rates on loans. One missed payment could knock 50 to 100 points or more off your credit score, especially if you had a high score to begin with, and additional missed payments would add to the damage.

The point: Pay on time. You can see how missteps such as skipping payments will affect your score with a free Credit.com account, which can also help you make a plan for improving your scores.