Delinquency Down on Bank HELs, Up on HELOCs

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MORTGAGE EXPERT
4 · 04 · 18

Even though the quarterly performance of bank-owned installment loans secured by home equity improved, home-secured credit-line delinquency worsened. Mobile-home lates plunged.

Loans that are owned by banks had a 30-day rate of 1.64 percent as of the fourth quarter of last year. The rate reflects performance on eight types of closed-end installment loans.

The composite delinquency
rate improved from the preceding three-month period by 4 basis points. But the rate has ascended 13 BPS from the final-three months of 2016.

The statistics were reported in the the American Bankers Association’s Consumer Credit Delinquency Bulletin.

“The steady creation of new jobs has been essential to keeping delinquencies low, and we’ve seen more than 10 million jobs filled in the past four years,” ABA Chief Economist James Chessen stated in the report. “Greater job stability and increased take home pay have allowed consumers to make more purchases while keeping balances low relative to their income.”

The economist additionally noted that the the Tax Cuts and Jobs Act will only aid loan performance by leaving consumers with more disposable income.

Delinquency on home-equity loans ended last
year at 2.28 percent, tumbling 14 BPS from the end of the third quarter and sinking 33 BPS from the end of 2016.

But on home-equity lines of credit, 30-day delinquency was 1.16 percent as of year-end 2017, worsening 8 BPS from three months earlier and ascending 10 BPS from one year earlier.

ABA reported that mobile-home loan delinquency was 4.48 percent — plunging 49 BPS on a quarter-over-quarter basis. The rate on mobile-home loans was 41 BPS worse, however, during the same three months the previous year.

Banks cut the 30-day rate on property-improvement loans 4 BPS to 1.04 percent, though the category has deteriorated from 0.98 percent as of year-end 2016.

“The positive trajectory of home-related delinquencies goes hand-in-hand with a growing economy and an improving housing market,” Chessen said. “Rising property values boost wealth, increase confidence in the ability to meet future obligations and give homeowners an extra incentive to stay current.”

Mortgage Expert

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