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Record HEL Delinquency as Overall Consumer Improves

Mortgage News

Quarterly delinquency on home-equity loans and home-equity lines-of-credit climbed to the highest level on record at U.S. banks. But overall consumer delinquency improved.

HEL delinquency of at least 30 days reached a record 4.30 percent in the third quarter, the American Bankers Association reported today. Late payments on HELs were up 29 basis from the previous quarter. In the third-quarter 2008, HEL delinquency was 2.63 percent.

HELOC delinquency was 2.12 percent — also a record. HELOC delinquency was 20 BPS higher than in the second quarter and 97 BPS worse than a year earlier..

On mobile homes, the delinquency rate was 3.63 percent, higher than the second quarter’s 3.53 percent and the third-quarter 2008’s 3.08 percent.

Late payments on property improvement loans, however, fell to 1.66 percent from 1.79 percent in the second quarter. The rate was 1.63 percent 12 months earlier.

Across the board, including other types of consumer lending, delinquency fell in seven categories — the first time since 2007 so many categories have declined.

The ABA’s composite ratio, which tracks eight categories of consumer loans, fell to 3.23 percent from 3.35 percent in the second quarter.

“Delinquencies may be near their peak as job losses have slowed,” ABA Chief Economist James Chessen said in the statement. “But there’s still a bumpy road ahead with many people unemployed and family budgets stretched to their limits.”

Chessen predicted expanded lending as the economy recovers.

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