Home Equity Line Delinquencies Rise at Fastest Rate on Record

July 2, 2008 No Comments »

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The delinquency rate on home equity lines of credit rose at the fastest pace ever recorded to reach the highest level in 11 years during the first quarter, according to a report released today from the American Bankers Association.

The bankers group said 1.10 percent of all home equity lines were 30 days or more past due, up from 0.96 percent in the fourth quarter and 0.60 percent in the first quarter of 2007.

ABA chief economist James Chessen noted that high food and gas prices have taken a toll on consumers, making it more difficult for them to manage debt, especially with the option of using home equity all but out the window for many Americans.

In recent months, a number of banks and mortgage lenders have either cut or frozen home equity lines, citing rapidly depreciating home prices, leaving scores of homeowners with little place to turn for relief.

Delinquent credit card accounts also worsened, rising 13 basis points to 4.51 percent during the quarter, the highest level in two years.

And delinquencies rose 30 basis points to 3.22 percent for mobile-home loans, two basis points to 1.92 percent for auto loans issued by banks, and seven basis points to 2.55 percent for personal loans.

There were some areas of improvement, including indirect auto loan delinquencies, which fell four basis points to 3.09 percent, and fixed home equity loans (second mortgages), which dipped five basis points to 2.34 percent.

(photo: jurvetson)

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