Delinquency Rates

January 19, 2012 | David Hernandez, CFA, Director of Traditional Manager Search

This week’s Chart of the Week examines four types of loans and their delinquency rates over the past twenty years. A loan is considered to be delinquent if it is past due by thirty or more days. The delinquency rate is the percentage of loans that are considered to be delinquent.

The chart shows all four delinquency rates are on a noticeable decline from their peaks as the economy has made some improvements over the last two years. In fact, three of the four rates have fallen below their respective twenty year averages. Business loan delinquency rates have followed the pattern of the business cycle therefore it is not surprising to see the rates go down as we emerge from recession. Consumer and credit card delinquency rate declines are due in large part to commercial banks writing off bad debt, a tightening of lending standards, and consumers deleveraging. More individuals are no longer paying their mortgages, thus freeing up money to pay off other debts.

The delinquency rate for single family mortgages remains considerably higher than its twenty year average. Many homes are now valued significantly lower than their loan balances. This fact, coupled with a challenging job market, has contributed to the high delinquency rate. The potential that these delinquent properties will eventually end up in foreclosure make it an even more challenging environment for residential real estate. Foreclosures will increase the supply in an already oversupplied market and exacerbate the downward pressure on home prices. As discussed in our 2012 Market Preview, this environment has led to a boom for owners of rental units: the apartment sector has benefitted because individuals are now turning to rentals rather than purchasing homes.

David Hernandez, CFA
Director of Traditional Manager Search

Get to Know David

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Related Content


A Falling Tide Lowers All Boats

The resilience of the American consumer has been an unanticipated phenomenon in the four years since the outbreak of the…


The “Fix” Is In!

The strength of the U.S. economy over the last several quarters has surprised many investors, as consensus expectations from the…


The Emergence of Argentinian Equities

Argentina has faced myriad economic headwinds in recent time, including hyperinflation, currency-related difficulties, and a series of defaults on its…


Is Bitcoin Fairly Valued?

Despite mixed performance to start 2024, bitcoin finished the first quarter up roughly 68%. Buoyed by a broad weakening of…


1Q 2024 Market Insights Video

This video is a recording of a live webinar held April 25 by Marquette’s research team analyzing the…


Mind the Gap

Any ride on the London Tube reminds riders to mind the gap: Beware the space between train car and platform…

More articles

Subscribe to Research Email Alerts

Research Email Alert Subscription

Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.

We respect your privacy. We will never share or sell your information.

Thank You

We appreciate your interest in Marquette Associates.

If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.

Contact Us >