Mortgage, Equity Loan Write-Offs Decrease More Than 37% in Past Year to 7-Year Low

Consumers are faring much better at paying their mortgages and equity lines of credit on time. So much so that home finance write-offs in May hit a seven-year low at $43.5 billion, said the credit bureau Equifax.

May’s figure represents a decrease of more than 37 percent from the same time period a year ago. Home finance includes first mortgage and home equity installment and revolving lines of credit.
Year-over-year changes in home-finance total delinquencies (30 or more days past due), measured as a percentage of outstanding balances, include:

  • First mortgages: decreased 29% (from 6.4% to 4.6%);
  • Home equity installment: decreased 27% (from 5.2% to 3.9%); and
  • Home equity revolving: decreased 10% (from 2.7% to 2.4%).

“Households continue to improve their financial situation,” said Dennis Carlson, Deputy Chief Economist at Equifax. “Delinquencies for nearly every credit sector are at the lowest point since prior to the Great Recession, with home finance leading the charge. Additionally, originations have increased as well, suggesting that consumers are ready to either rebuild or expand, depending on the circumstances they found themselves in when the dust cleared.”
The total balance of first mortgages 90 or more days past due, or in foreclosure, is less than $230 billion, a six year low and a decrease of 30 percent from same time a year ago.
The total credit limit of newly originated home equity revolving lines in the first quarter of 2014 is $23.4 billion, a six-year high and an increase of 15.5 percent from same time a year ago.
Of those revolving home equity loans that are severely delinquent, nearly 70 percent are from loans originated from 2005-2007, the height of the housing market meltdown.
The total balance of home equity installment loans increased 8.3 percent from April to May 2014, realizing its first month-over-month increase this year.
Here are other Equifax highlights:
Bank-issued credit card

  • The total number of new cards issued year-to-date in Q1 2014 is 11.3 million, a six-year high and an increase of 17.2% from same time a year ago;
  • Similarly, the total new credit originated in that same time is $57.1 billion, also a six-year high and an increase of 24.4% from Q1 2013;
  • Accounts 60-or-more-days past due (excluding write-offs) as a percentage of total loans is 0.99%, a year-over-year decrease of 9.5% and the lowest since 2005.

Auto Loans

  • The total number of new loans originated in Q1 of 2014 is 6 million, an eight-year high and a 5.6% increase from Q1 2013.
  • The total balance of new loans originated in the same time is $120 billion, also an eight-year high and an increase of 7.3% from Q1 2013; and
  • Write-offs represent 2.26% of total outstanding balances in May 2014, a decrease of 1% from same time a year ago.

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