Home Loan Write-Offs at 5-Year Low; New Auto Loans Surge

Home Loan Write-Offs at 5-Year Low; New Auto Loans SurgeHome finance write-offs through May 2013 total $69.7 billion, a five-year low and a decrease of more than 23 percent compared to the same period in 2012.
That’s nearly 45 percent less than the high set over the first five months of 2010 ($126 billion).
Meanwhile, auto loan originations continue outpacing other loan products, accounting for nearly half of the total new credit dollars originated in the first quarter of 2013, according to a new update on lending trends from the credit bureau Equifax.
Non-home finance write-offs are not faring as well at a total $33.9 billion through May 2013, a year-over-year increase of 3 percent from $32.8 billion.
But, year-over-year decreases in home-finance 30-day delinquency rates in May 2012, compared May 2013, are substantial:
First mortgage: decreased more than 22 percent, from a rate of 8.26 percent to 6.40 percent;
Home equity revolving: decreased more than 22 percent, from 3.43 percent to 2.67 percent;
Home equity installment: decreased 18 percent, from 6.39 percent to 5.24 percent.
“While there is still concern over the high volume of existing severely delinquent loans, otherwise known as the shadow inventory, rising home values are bringing more and more borrowers into positive equity and decreasing the likelihood that they will fall into trouble,” said Equifax Chief Economist Amy Crews Cutts.
Mortgage rates have recently jumped to a two-year high of more than 4 percent on 30-year fixed-rate mortgages, have still historically low rates have bolstered strong refinance activity and pushed homebuyer affordability to new highs, Cutts added.
However, originations of new first mortgages have failed to keep pace with write-offs and pay-offs.
Total new consumer credit, excluding first mortgages, in the first quarter of 2013 is 45 percent higher than same time in 2010, the recent year-to-date low point.
Here are other highlights from the Equifax report:
Auto Loans:

  • Year-over-year, the total balance of new credit increased nearly 9 percent from $740.7 billion in May 2012 to $806.5 billion in May 2013.
  • The total number of new loans increased more than 8 percent, year-over-year, Q1 2012-2013, from 5.2 million to 5.6 million.
  • By source, bank-funded auto loans increased more than 13 percent year-over-year in Q1 2012-2013, from $18 billion to $20.4 billion, while auto finance company funded loans increased more than 5 percent in that same time, from $20.6 billion to $21.7 billion.

First Mortgage:

  • 65 percent of severely delinquent balances are from loans opened 2005-2007.
  • Year-over-year, agency-funded first mortgage balances increased 4.5 percent from $3.75 trillion in May 2012 to $3.91 trillion in May 2013.
  • Conversely, non-agency funded first mortgage balances decreased 7.7 percent in the same time, from $4.13 trillion to $3.81 trillion.

Home Equity Revolving:

  • The total number of new loans in Q1 2013 are 211,000, a year-over-year increase of more than 10 percent.
  • Year-over-year, the total balance of new credit increased more than 15 percent in that same time, from $17.6 billion to $20.2 billion.
  • Both new loans and new credit for Q1 2013 are four-year highs for that time period.
  • 73 percent of severely delinquent balances are from loans opened 2005-2007.

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