Equifax: Write-offs hit 9-year low for first quarter


Write-offs for home equity lines of credit and home equity loans totaled $9.5 billion for the first quarter 2016, a nine-year low for the first quarter, according to Equifax’s April 2016 National Consumer Credit Trends Report.

Not only are they at a nine-year low, but write-offs are also down by 22.7% just from 2015’s first quarter.

But there is bad news.

First mortgage write offs increased this year by 0.6% to 52 million in March.

The severe delinquency rate is down for first mortgages by 2.35% to 1.65%, the lowest since September 2007. 

Outstanding mortgage balances total $8.37 trillion, an increase of 2.7% from last year.

“Homeowners are in the best financial shape they’ve been in since well before the start of the Great Recession,” said Amy Cutts, Equifax senior vice president and chief economist. “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,” Cutts said. “Lending standards remain exceedingly tight, with the median Equifax Risk Score on a new first mortgage running at 749 in the first quarter of 2016. On newly originated home equity lines of credit, known as HELOCs, the median credit score much higher at 788.”

The data also shows improvements in severe delinquency rates.

Balances 90-days past due or in foreclosure and as a share of total balances, annual declines in March include the following:

  • First mortgage: from 2.35% down to 1.65%
  • Home equity installment loans: from 1.98% down to 1.59%
  • Home equity revolving lines of credit: from 1.47% down to 1.33%

Additionally, the number of outstanding home equity loans in March decreased 1.8% from last year to 4.5 million. The total number of loans decreased by 10.6% annually. The outstanding balance on these loans decreased by 4.2% to March’s $130.4 billion.

The number of HELCOs decreased by 3.2% in March to 11 million.

The total outstanding balances also decreased to $489.9 billion by 3.9%.

The utilization rate, or the balance owed divided by the credit limit, decreased to below 50% for the first time in eight years.

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