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HELOC Activity Sinks, Delinquency Climbs

Mortgage News

As the volume of new home-equity lines-of-credit has fallen, delinquency has risen. But the share of HELOC borrowers with good credit scores has improved.

U.S. HELOC originations were 75,600 in September, down from 117,800 in September 2008, Equifax reported today.

The findings were based on the credit files of nearly 200 million U.S. consumers.

From January through September, 761,000 U.S. HELOCs were closed — lower than 1.5 million during the same period in 2008. During all of 2008, HELOC volume was 1.7 million, down from 2.9 million in 2007.

“In addition, home-equity lines-of-credit available to consumers are now an estimated $68 billion lower and the number of accounts is an estimated 855,000 lower than the September 2008 peak of approximately 14.5 million accounts,” the statement said. “This represents an improvement from October when outstandings were $77 billion lower and accounts were lower by approximately 934,000.”

HELOC originations have fallen the most in states that have seen the worst declines in property values — including California and Florida. New HELOCs in California declined to less than 5,182 for $1 billion from 38,000 lines for $6 billion in September 2007.

HELOC borrowers with a credit score of at least 740 accounted for 81 percent of U.S. activity during September compared to two-thirds two years earlier.

The average HELOC sits at $79,000, down from $105,000 two years ago.

HELOC delinquency was 3.43 percent during November, higher than October’s 3.39 percent and 2.95 percent a year earlier.

Equifax also reported that first mortgage debt outstanding declined 5.4 percent from a year ago.

Home-loan delinquency of at least 30 days was 7.91 percent during November — an all-time high for late payments. Late payments rose from 7.76 percent the prior month and 5.83 percent the prior year.

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