The total balance of write-offs year-to-date through March for first mortgages, home equity lines of credit (HELOCs) and home equity loans is $9.5 billion, a nine-year low for Q1 and a year-over-year decrease of 22.7%, according to data from the latest Equifax National Consumer Credit Trends Report.

The figures also show ongoing 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% to 1.65%; 
  • Home equity instalment loans: from 1.98% to 1.59%; 
  • Home equity revolving lines of credit: from 1.47% to 1.33%.

"Homeowners are in the best financial shape they've been in since well before the start of the Great Recession," said Amy Crews Cutts, senior vice president and chief economist at Equifax. "Total mortgage debt is down over $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. Moreover, the average interest rate on outstanding mortgage loans keeps falling as more and more homeowners refinance into rates below 4%, giving borrowers more spending capacity each month.
Lending standards remain exceedingly tight, according to Crews Cutts, with the median Equifax Risk Score on a new first mortgage running at 749 in the first quarter. On newly originated home equity lines of credit, known as HELOCs, the median credit score was much higher at 788.

Additional data from the April 2016 Equifax National Consumer Credit Trends Report includes: 

Home Equity Installment

  • The total number of outstanding loans in March is 4.5 million, a decrease of 1.8% from same time a year ago; 
  • The year-over-year rate of decline in the total number of loans has slowed considerably. From March 2014-2015, the number of accounts decreased 10.6%; and 
  • Similarly, the total outstanding balances on home equity loans in March is $130.4 billion, a year-over-year decrease of 4.2%.

Home Equity Lines of Credit (HELOC)

  • The total number of outstanding HELOCs in March is 11.0 million, a decrease of 3.2%; 
  • The total balances outstanding on HELOCs in that same time is $489.9 billion, a decrease of 3.9%; and 
  • The utilization rate on HELOCs (the balance owed divided by the credit limit) has fallen below 50% for the first time since 2008.

First Mortgage

  • The total number of first mortgages as of March 2016 is 50.2 million, a year-over-year increase of 0.6%; 
  • The total balances outstanding on first mortgages in that same time is $8.37 trillion, a year-over-year increase of 2.7%; 
  • The severe delinquency rate (as a share of balances 90-days past due or in foreclosure) is 1.65%, down from 2.35% 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.

Equifax's National Consumer Credit Trends Report reveals population-level debt and lending insights, including originations, balances, number of loans, delinquencies and more from more than 220 million consumers.
 

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