TransUnion Finds Correlation Between PTI Ratios, Mortgage Delinquencies

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TransUnion, Chicago, released a new analysis finding a correlation between rising payment-to-income ratios and rising mortgage delinquencies.

TransUnion’s study specifically revealed a strong and consistent link between changes in PTI for non-mortgage products, such as credit cards, HELOCs and student loans, and increases in mortgage delinquency rates a year later.  

For example, in March 2023, the credit card consumer payment-to-income ratio was 2.18%, in June 2023 it was 2.25%, in September 2023 it was 2.31% and in December 2023 it was 2.33%.

Looking forward a year, mortgage delinquencies (defined for this report as 60-plus days-past-due) followed a similar trajectory. They were at 0.42% in March 2024, 0.46% in June 2024, 0.56% in September 2024 and 0.63% in December 2024.

Similar findings also applied to PTI ratio patterns for HELOCs and student loans. TransUnion noted this may mean that as borrowers allocate a greater portion of their income toward different types of debt, it may strain their ability to stay current on mortgage payments.

“In this challenging economic environment, lenders must leverage every available tool at their disposal to more effectively segment and manage risk,” said Satyan Merchant, senior vice president and auto and mortgage business leader at TransUnion. “Trended credit data can play a critical role in identifying shifts in key attributes such as average effective payment, non-mortgage delinquencies, and debt-to-income ratios. These innovative insights can help pinpoint consumers who are at a higher likelihood of becoming delinquent and, importantly, enable lenders to proactively contact and work with consumers at heightened risk of default to help them stay on track and avoid falling behind on payments.”