TransUnion data Shows Rising Payment-to-Income Ratios as Early Warning for Mortgage Delinquencies
Chicago, IL – A new analysis from TransUnion reveals a concerning trend: rising Payment-to-Income (PTI) ratios are emerging as a key indicator of potential mortgage delinquency, offering lenders a crucial window to proactively address borrower financial strain. the findings, released today, suggest lenders can gain up to 12 months of advance warning by monitoring thes trends quarterly.
The research comes at a time of heightened economic pressure, with inflation driving a 10% increase in average non-mortgage balances as 2022. As consumers dedicate a larger portion of their income to debt servicing, their ability to maintain mortgage payments is increasingly vulnerable.
TransUnion’s analysis focuses on the meaning of tracking how much borrowers pay above their minimum due.This behavior, alongside overall PTI trends, provides valuable insight beyond customary delinquency metrics. The company’s TruVision portfolio management tool is designed to leverage this data, enabling lenders to identify at-risk borrowers and offer tailored solutions like counseling or payment plans.
“These innovative insights can help pinpoint consumers who are at a higher likelihood of becoming delinquent and enable lenders to proactively contact and work with consumers at heightened risk of default,” explained Satyan Merchant, senior vice president and auto and mortgage business leader at TransUnion.
While the U.S. consumer credit market currently demonstrates overall stability with growth in key lending categories, the observed increase in mortgage delinquencies signals a potential broadening of financial stress. TransUnion emphasizes the importance of PTI monitoring as a vital tool for navigating the evolving credit landscape.
The company’s “Information for Good” mission is reflected in its continued development of data-driven solutions like TruVision, aiming to foster economic opportunity and empower consumers. By proactively identifying and addressing potential issues, lenders can mitigate losses while simultaneously supporting borrowers in maintaining financial stability.
TransUnion’s findings underscore the value of advanced analytics in mortgage risk management, offering a forward-looking approach to protecting both lender portfolios and homeowner financial well-being.
