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Bank Home Equity Delinquency Declines

Mortgage News

Mortgage Daily

                                                 October 5, 2017

On installment loans and lines of credit that are secured by single-family properties and owned by banks, quarterly delinquency moved lower.

On consumer installment loans that are owned by banks, delinquency of at least 30 days came in at 1.56 percent as of the second quarter of this year.

The past-due rate, which reflects the performance of eight types of closed-end loans, was no different than in the preceding three-month period.

But
the rate deteriorated from the second quarter of last year, when it was just 1.35 percent.

The American Bankers Association reported the latest statistics in its
Consumer Credit Delinquency Bulletin.

“We’re in the ninth year of economic expansion when you might expect the pendulum to begin swinging the other way, but delinquencies remain below historical levels as consumers continue to show great command of their finances,” ABA Chief Economist James Chessen stated in the report. “The outlook remains very positive, as the strong job market, growing wages and rising wealth provide the financial wherewithal for consumers to keep current on their financial obligations.” 

On just home-equity loans, ABA said delinquency tumbled to 2.50 percent from
2.59 percent in the first quarter. The improvement was even more substantial versus the second-quarter 2016, when the rate was 2.70 percent.

The 30-day rate on home-equity lines of credit
declined 4 basis points to 1.07 percent. A 14-basis-point year-over-year improvement was recorded for HELOC delinquency.

“Home equity-related delinquencies fell across the board as the housing market continued to improve, and they’re now back down to levels last seen in 2008,” Chessen said. “Increased property values and greater home equity have provided a strong incentive for people to remain current on their home loan obligations.” 

Second-quarter 2017 delinquency on property improvement loans was 0.95 percent, down three BPS from three months earlier
but 4 BPS worse than 12 months earlier.

ABA reported mobile-home delinquency at 5.08 percent, worsening from 4.86 percent at the end of March. But the rate has significantly deteriorated from 3.17 percent as of mid-2016.

Chessen noted that it will take several quarters before the impact from the hurricanes on consumer credit performance is known.

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