Mortgage Balances Down Over 2014 Q2, But Still Higher Than 2013
People across the country are paying down their mortgages and taking out home equity lines, but they aren’t using them just yet, aaccording to the Equifax National Consumer Credit Trends Report.
Number and total balances of delinquent mortgages declining
Mortgage balances decreased by 2.5 percent in the second quarter of 2014. However, with a 0.3 percent gain year-over-year, this is still slightly higher than the 2013 figures. In addition, the proportion of problem mortgages in relation to current total outstanding balances has continued to decline. This is great news for lenders.
The latest figures show delinquent first mortgages that are 30 days or more past due made up less than 4.78 percent of current outstanding mortgage balances during Q2. This is 22.9 percent lower than the same time last year and represents a significant decrease. At just under $220 billion, the total balance of mortgages more than 90 days delinquent is 36.8 percent lower than it was a year ago. This is a dramatic improvement, as well as the lowest figure seen in six years.
Home equity line balances decreasing while limits increase
Mortgage balances aren’t the only form of outstanding home credit balances in decline. The June numbers indicate a 5.4 percent decline in the total outstanding balance of home equity revolving loans year-over-year. At the same time, the total home equity line limit during the first four months of 2014 stood at $33.3 billion. This is the highest it’s been in six years and is an increase of 17.4 percent over the April 2013 number. During that period, more than 333,000 new loans were originated —12 percent more than the previous year and the highest number of new loans in the past five years.
Mixed real estate/housing data
The improved mortgage delinquency figures are reflective of a larger trend in improving consumer credit. According to the Federal Reserve’s Beige Book report of July 16, 2014, the credit quality and standards have either remained stable or improved nationwide. At the same time, the report reveals low inventories and increasing house prices in many districts.
According to the latest figures from the report, it appears that borrowers are paying down their mortgages while also setting up and/or increasing home equity lines. However, they aren’t borrowing against them. Based on this information, it seems people in most areas of the country remain cautiously optimistic about economic growth. It is, therefore, possible that the next report will show a slight rise in home equity line balances as people gain confidence in the U.S. economy.
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