Rising home values continue to provide consumers with a strong incentive to keep up with their home-equity loan payments.
According to the American Bankers Association's quarterly report on consumer delinquency trends, late payments on home-equity loans and home-equity lines of credit have dipped below 15-year averages for the first time since the Great Recession.
In the fourth quarter of 2015, the 30-day delinquency rate on home-equity loans fell 23 basis points, to 2.68%, from three months earlier, and home-equity line delinquencies fell 13 basis points, to 1.18%, the survey found. However, property improvement loan delinquencies rose 5 basis points quarter over quarter, to 0.92%.
James Chessen, the ABA's chief economist, said that the decline in delinquency rates is good news for consumers looking to tap into the equity in their homes.
"The strong and consistent rise in home prices over the last three years has restored equity, which makes keeping loans current even more of a top priority for homeowners," Chessen said in a statement. "With rising home equity and shrinking delinquencies becoming the status quo, banks are more willing to extend new home equity loans and lines to qualified borrowers."
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, remained at 1.41% in the fourth quarter, 13 basis points below the same period on 2014 and well below the 15-year average of 2.24%, the ABA said.
Among open-ended loans, the rate of late payments on bank-issued credit cards fell by 2 basis points, to 2.52%, in the fourth quarter and remains well below the 15-year average of 3.70%.
Car loan delinquency rates ticked up slightly in the fourth quarter. Delinquencies on direct auto loans rose by a basis point, to 0.75%, in the fourth quarter from three months earlier while on indirect car loans they climbed from 1.51% to 1.54%.
Chessen said a confluence of factors, including an improved economy and growth in wages, have kept delinquencies very low.
"Even during the holiday spending season when temptation to overspend reaches its peak, consumers did a good job of ensuring expenses did not outpace income," he said.