Mortgage Write-Offs at 9-Year Low
Equifax, Atlanta, reported total balance of write-offs year-to-date in March for first mortgages, home equity lines of credit and home equity loans fell to $9.5 billion in the first quarter, a nine-year low and a year-over-year decrease of 22.7 percent.
The company’s first quarter National Consumer Credit Trends report also noted improvements in severe delinquency rates. Balances 90-days past due or in foreclosure and as a share of total balances, the year-over-year declines in March include: first mortgage: from 2.35 percent to 1.65 percent; home equity instalment loans: from 1.98 percent to 1.59 percent; and home equity revolving lines of credit: from 1.47 percent to 1.33 percent.
Amy Crews Cutts, Senior Vice President and Chief Economist with Equifax, said total mortgage debt is down by more than $1 trillion; owner’s equity is up to $12.5 trillion, nearly double the amount held in 2011; and low inventories of homes for sale are driving prices up at a modest pace.
“Homeowners are in the best financial shape they’ve been in since well before the start of the Great Recession,” Cutts said. “Moreover, the average interest rate on outstanding mortgage loans keeps falling as more and more homeowners refinance into rates below 4 percent, giving borrowers more spending capacity each month.”
The report noted ending standards remain exceedingly tight, with the median Equifax Risk Score on a new first mortgage running at 749 in the first quarter. On newly originated HELOCs, the median credit score much higher at 788.
Other report highlights:
First Mortgage
–First mortgages as of March was 50.2 million, a year-over-year increase of 0.6 percent;
–Total balances outstanding on first mortgages was $8.37 trillion, a year-over-year increase of 2.7 percent;
–The severe delinquency rate (as a share of balances 90-days past due or in foreclosure) was 1.65 percent, down from 2.35 percent same time a year ago; and
–Severe delinquencies are at the lowest level since September 2007, as a share of both outstanding loans and balances.
Home Equity Installment
–Outstanding loans in March was 4.5 million, a decrease of 1.8 percent from a year ago;
–Year-over-year rate of decline in the total number of loans slowed considerably, by 10.6 percent; and
–Total outstanding balances on home equity loans in March was $130.4 billion, a year-over-year decrease of 4.2 percent.
Home Equity Lines of Credit
–Outstanding HELOCs in March was 11.0 million, a decrease of 3.2 percent;
–Total balances outstanding on HELOCs was $489.9 billion, a decrease of 3.9 percent; and
–Use rate on HELOCs (the balance owed divided by the credit limit) fell below 50 percent for the first time since 2008.
The report reveals population-level debt and lending insights, including originations, balances, number of loans, delinquencies and more from more than 220 million consumers.
