Bank-Owned HEL Delinquency Up, HELOC Rate Down

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As the past-due rate on consumer credit held by banks deteriorated, so did the rate on home-equity loans. But performance on home-secured credit lines fell.

Closed-end consumer lending assets held on the balance sheets of U.S. banks had a 30-day delinquency rate of 1.73 percent as of the conclusion of the first quarter.

The metric is based on the Composite Ratio — a reflection of the performance of eight closed-end types of consumer loans including HELs that are owned by banks.

Consumer delinquency climbed 9 basis points compared to the final quarter of last year, according to the index, which was reported Tuesday by the American Bankers Association.

Even worse was the deterioration since the same-three months of last year, with the 30-day rate climbing 17 BPS.

“Delinquencies have been so low for so long that it is not surprising to see them ease back toward more normal levels,” ABA Chief Economist James Chessen said in the report. “We are still well below the 15-year average.”

Chessen went on to explain that more jobs and better wages are holding down delinquency, and economic fundamentals are positive.

ABA’s data indicate that 30-day delinquency on bank-owned HELs was 2.31 percent, rising 3 BPS from the end of last year. But the HEL rate has tumbled 28 BPS versus the same date in 2017.

On home-equity lines of credit, 30-day delinquency slipped 2 BPS from year-end 2018 to 1.14.
But the HELOC rate has climbed 3 BPS from the same date last year.

A 12-basis-point ascension left delinquency on property improvement loans at 1.16 percent. The rate was 18 BPS worse than a year earlier.

The trade group reported a delinquency rate of 5.09 percent on mobile-home loans,
soaring 61 BPS from Dec. 31, 2017. The 30-day rate has escalated 23 BPS from the same point in 2017.

Mortgage Expert

Mortgage Daily Staff