Borrowers are taking on higher credit balances after dropping more than $1.5 trillion in mortgage debt since the financial crisis, according to a report from Equifax.
The total outstanding balances of home loans and bank- and retail-issued cards increased for three consecutive months for the first time in three years. Home loans include first mortgage, home equity installment and home equity revolving balances.
Delinquencies continue a downward trend. First mortgage delinquencies (30-or-more days past due or in foreclosure) decreased 22.8 percent in January from the year-ago period. In that same time, home equity installment delinquencies fell 22 percent, while home equity revolving delinquencies decreased 10.6 percent.
Home purchase transactions, in which first time homebuyers take on entirely new mortgage debt and move up buyers increase their existing mortgage debt, have finally overtaken foreclosures and accelerating pay-downs, resulting in increases home finance balances, said Amy Crews Cutts, Equifax Chief Economist.
Balances on retail cards have been trending up for some time, while bank card balances have continued trending down, she added.
First mortgage balances increased 2.5 percent, from $7.7 billion in January 2013 to $7.9 billion in January 2014, the largest year-over-year increase in more than 36 months.
In that same time, however, total home equity balances fell more than 6 percent, from $664.3 billion to $622.3 billion.
Other highlights from the latest Equifax data include:
Bank-issued Credit Card:
-- The total number of loans outstanding is more than 315 million, the highest since October 2009;
-- The total limit of new bank card credit originated January-November 2013 is $184.4, a five-year high and an increase of 12.5 percent from same time a year ago;
-- Similarly, the total number of new card accounts issued in that same time is 39.6 million, also a five-year high and an increase of 9.5 percent from same time a year ago;
-- Additionally, write-offs on bank card accounts have decreased 14.4 percent (from 4.49 percent to 3.85 percent of balances).
Retail-issued Credit Card:
-- The total number of loans outstanding is more than 190 million, a 53-month high;
-- The total limit of new retail card credit originated from January-November 2013 is $67.2 billion, a five-year high and increase of more than 10 percent from same time a year ago;
-- Similarly, the total number of new retail card accounts issued in that same time is 35.9 million, the highest since 2007 and an 8.9 percent increase from the same time a year ago.