Equifax data show declining delinquency rates
A turnaround in home pricing trends is a factor on the improvement of consumer payment behavior and delinquencies in all major areas--except student loans--for the first half of 2013, reports Equifax in its latest National Consumer Credit Trends Report, released July 26.
The trend mirrors the trend in credit unions. Overall loan delinquencies reported by credit unions in May were 1.14% of loans, compared with 1.17% in April, 1.2% in March, 1.21% in February and 1.18% in January, according to the Credit Union National Association's (CUNA’s) Credit Union Monthly Estimates for May 2013, the latest information available.
The Equifax data reflect that the biggest improvement was in the home finance arena, with year-over-year serious delinquency rates (90-days or more past due or in foreclosure) declining sharply as a percentage of total balances outstanding:
- First mortgage delinquencies decreased more than 27%--to 4.14% from 5.70% ;
- Home equity revolving decreased nearly 24%--to 1.75% from 2.30%; and
- Home equity installment decreased more than 20%--to 3.31% from 4.16%.
Year-over-year changes in the 60-day-plus delinquency rates for other loans also decreased for bankcards, which dropped more than 16%--to 1.82% from 2.17%, and for auto loans, which decreased more than 11%--to 1.09% from 1.24%.
"The turnaround in home price trends over the past year is having a substantial impact on mortgage delinquency rates," said Equifax Chief Economist Amy Crews Cutts. "As more and more homeowners find themselves back in positive equity, the incentive to default is strongly tempered."
She noted that performance in other sectors is improving with the gradual economic recovery, but "we are seeing a strikingly different trend with student loan debt, which is both the fastest growing consumer debt segment and the only segment in which we're seeing rising severe delinquency rates and accelerating write-off rates."
Other results for home equity revolving, bankcards, auto, and student loans are listed below.
Home equity revolving:
- The total balance of new credit opened from January to April increased more than 17% to $24.1 billion, compared to the $24.1 billion for the same time period in 2012;
- The total number of new loans also increased more than 11%, to 297,600 from 266,600; and
- Both new loans and new credit year-to-date in April are four-year highs.
- At $62.3 billion, the total limit of new credit issued between January and April is a five-year high for that period and an increase of 74% over the recession low of $35.8 billion for the same time during 2010;
- The total number of new loans year-to-date in 2013 is 13.2 million, a five-year high for that period and an increase of more than 6% from the 12.4 million for the same period one year earlier; and
- Compared to $58 billion the first four months of the year in 2012, the year-to-date total limits of new credit increased more than 7%, to $62.3 billion.
- The total balance of new credit issued January-April is $152.7 billion, an eight-year high for that period and an increase of more than 13% from January-April 2012;
- Year-over-year, total outstanding balances rose more than 9% to $816.4 billion in June 2013 from $745.1 billion in June 2012;
- The total number of new loans year-to-date in April 2013 increased more than 10% from the a year earlier--to 7.7 million from seven million; and
- By source, bank- funded auto loans rose more than 19% year-over-year for the first four months of 2013 to $76.9 billion from $64.3 billion, while auto finance company-funded loans were up more than 8%, to $75.8 billion from $70 billion.
- The total balance of loans outstanding increased year-over-year more than 11% to $880.3 billion from $791.2 billion in June 2012;
- New credit year-to-date in April totaled $19.3 billion, an increase of nearly 14% from the period a year earlier; and
- Conversely, the total number of new loans originated during this same time decreased 1.9%, from 3.4 million to 3.3 million, a five-year low for the first 4 months of the year.