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Bankers Report Higher Delinquency

Mortgage News

Late payments on bank’s home-equity products during the first three months of this year worsened with the economy.

Delinquency of at least 30 days on closed-end home-equity loans was 4.12 percent during the first quarter, the American Bankers Association reported in its Consumer Credit Delinquency Bulletin.

HEL late payments deteriorated from 4.05 percent in the fourth quarter.

ABA speculated that a weak first-quarter economy impacted consumer loan performance.

“Rising gas and food prices took a big bite out of family budgets in the first quarter of 2011,” ABA Chief Economist James Chessen explained in the report. “With family incomes already stretched, even small increases in daily living expenses can be enough to derail the ability to meet debt obligations. Consumers are feeling insecure about the economy and whether their financial resources can carry them through until conditions improve.”

Compared to the first-quarter 2010, HEL delinquency was unchanged.

Also worsening from the end of last year was performance on home-equity lines of credit.

The trade group said that the HELOC rate climbed to 1.80 percent from the fourth-quarter of last year’s 1.73 percent. But HELOC defaults managed to trim 1 basis point off of the rate from the first-quarter 2010.

Property-improvement delinquency was lower, falling to 1.02 percent from 1.26 percent three months earlier. Property-improvement performance was also better than a year earlier, when delinquency stood at 1.40 percent.

Also lower were defaults on mobile-home loans, which fell to 3.74 percent from the prior quarter’s 3.92 percent but were higher than the prior year’s 3.65 percent.

ABA’s composite delinquency index, which reflects eight categories of loans, was up 3 BPS from the final three months of last year to 2.71 percent.

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