Data released Wednesday by the Mortgage Bankers Association showed the mortgage delinquency rate rose in the first quarter to 9.38 percent of all loans outstanding, from 8.22 percent in same period last year.
When adjusted for seasonal variations, the default rate rose over 10 percent for the first time.
Seasonal adjustments are used to smooth out data in ordinary times, but in these extraordinary times the bankers’ group said it was not sure how much they could be trusted. In the first quarter the seasonal adjustments showed the delinquency rate worsened considerably. The raw data, on the other hand, indicated a marked improvement.
Warning that “fundamental market factors” might be exercising undue influence over the seasonal numbers, the mortgage bankers said they did not know whether the optimistic or pessimistic sequence was more accurate.
“We may be at a point where the market is changing for the better, but we can’t be sure because of the confounding effect of seasonal differences,” said Jay Brinkmann, the group’s chief economist.
Yesterday's mortgage data conflicted with this report from Reuters:
Fewer U.S. consumers are falling behind on their debt, prompting lenders to look again for ways to make their business grow.
Delinquency rates on mortgages, home equity loans and credit card bills fell in April for the third straight month, according to data that Equifax Inc (EFX.N), one of the largest U.S. credit bureaus, provided exclusively to Reuters.
The data is based on Equifax' 200 million-plus files of U.S. consumers using credit.
"If you think about the entire U.S. population as a risk portfolio, it's safe to say that the portfolio is indeed improving," said Dann Adams, president of Equifax' U.S. Consumer Information Solutions.
The only credit product in which delinquency continues to rise is student loans, where 11.2 percent are late, up 0.7 percent from March and 3.5 percent from last year.
"It's a tough labor market," Adams said. "It's difficult for many to start repaying those loans."
So, the MBA says one thing while Equifax says another. This should be interesting.
For more on seasonal adjustments, see this post from Silver Oz.
