Super prime borrowers, or those with credit scores above 781, and subprime borrowers with credit scores from 300 to 600, are the only two groups that have increased over the last three years.
More troubling for the mortgage industry is that borrowers in the subprime group are taking out mortgages that are performing worse than pre-pandemic and worse than any other credit score group.
Subprime mortgages taken out in Q4 2024, the most recent cohort, are more delinquent than those taken out in Q4 2018. In fact, the delinquency rate is 5.5% higher on those newer mortgages.
Super prime mortgages are not seeing the same deterioration. In fact, the mortgages taken out in Q4 2024 are at the same delinquency rate as the ones taken out in 2018.
Michele Raneri (pictured top), vice president and head of US research and consulting at TransUnion, said it is interesting to see how these more recent loans are generally performing worse, except among borrowers with the highest credit scores.