Home Finance: Write-Offs Decrease by More Than 37 Percent
The latest Equifax National Consumer Credit Trends Report is out, and it is full of good news. According to the report, as of May 2014, the total balance of delinquent home finance loans has decreased by more than 37 percent year-to-date over the same time last year. And not only has the total balance decreased, but at $43.5 billion, the total number of delinquencies is at a seven-year low.
Big improvements in home finance delinquencies year-over-year
A closer look at the change in the numbers year-over-year shows a significant improvement across a variety of home loan delinquency measures. The delinquencies, which are defined as home finance loans that are 30 days or more past due, are calculated as a percentage of the total outstanding mortgage balances, says the report. Broken down into categories, the findings are as follows:
- At just 4.6 percent of outstanding balances, first mortgage delinquencies are down 29 percent, from 6.4 percent at the same time last year.
- At 3.9 percent of outstanding balances, home equity installment loans are down 27 percent from 5.2 percent last year.
- At 2.4 percent, home equity revolving credit is down 10 percent, from 2.7 percent of outstanding balances at the same time last year.
Decreased delinquencies pointing to improved household finance
The lower occurrence of home loan delinquencies may indicate a widespread improvement in household finance. “Households continue to improve their financial situation,” says Dennis Carlson, Deputy Chief Economist at Equifax. Carlson says that delinquencies in almost all credit sectors have improved to points not seen since before the Great Recession. And the home finance sector is not only seeing marked improvements in delinquency rates, but is actually growing. According to Carlson, an increase in originations suggests that “consumers are ready to either rebuild or expand, depending on the circumstances they found themselves in when the dust cleared.”
Home loan statistics paint a rosy picture
Recent home loan figures indicate even more good news on the home finance delinquency front. When it comes to first mortgages, the total amount either in foreclosure or past due by 90 days or greater has fallen below $230 billion. This is the lowest it’s been in six years and is 30 percent lower than last year.
At the same time, people are borrowing more against their home equity. In the first quarter of 2014, the total credit limit of new home equity revolving lines hit $23.4 billion — the highest it’s been in six years. This is 15.5 percent more than it was 12 months previously. And home owners are flocking to home equity installment loans. The Equifax report found that the total balance of these loans was up 8.3 percent month-over-month between April and May of 2014.
Finally, Equifax reports that when it comes to “severely delinquent” home equity revolving loans, almost 70 percent are left over from loans that began during the years of 2005–2007.
Image source: Flickr
Recommended For You
We live and breathe technology, data and analytics, and our passion is providing insights that help you make more informed […]
Customer experience and customer growth go hand-in-hand. One way to improve your customer experience is to make better credit offers […]
This is the final article in a 5-part series. We originally published this post on December 20, 2016 and updated […]
In November, Equifax and Moody’s joined forces to recap the economic and credit trends of 2018 — and look ahead […]