Home Equity Delinquencies Hit New Record High

April 2, 2009 No Comments »


It’s not just mortgage rates that are setting records; delinquencies are also climbing to levels never seen before.

The latest bad news comes from the American Bankers Association’s Consumer Credit Delinquency Bulletin, which revealed that delinquencies increased in nearly all consumer loan categories.

Home equity loan delinquencies, largely second mortgages, rose 40 basis points to 3.03 percent during the fourth quarter of 2008, while home equity lines of credit (Helocs) rose 31 basis points to 1.46 percent, both record highs.

“The wheels just fell off the economy in the fourth quarter of 2008,” said ABA Chief Economist James Chessen, in a release. “The amount of job losses dealt the economy a severe shock, and that continues to be the biggest driver for delinquencies.”

“Clearly, we are seeing a rapid economic decline in all regions and in most business sectors,” Chessen added.  “It’s a steeper downslide than in previous recessions because consumers are saving more and spending less.”

He noted that delinquencies weren’t likely to see any improvement this year as the economy continues to shed thousands of jobs.

Credit card lates also rose from 4.20 percent to 4.52 percent, but remain close to their four average of 4.47 percent, thanks partially to the ability to adjust payments as budgets see fit (not that making the minimum payment on your credit card is a wise decision).

The only consumer loan category that saw a decrease in delinquencies was mobile home loans, which fell to 2.96 percent from 3.08 percent.

The ABA defines a delinquency as a late payment that is 30 days or more overdue.

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