COSTA MESA, Calif., Sept. 8, 2016 /PRNewswire/ -- Experian®, the leading global information services company, released a white paper today highlighting the latest U.S. lending trends related specifically to home equity lines of credit, commonly referred to as HELOCs. Based on this latest study, a rebound is underway that affects consumers and lenders positively, with consumers making payments on time and being responsible with their financial debts. Even with this positive outlook, consumers and lenders still should proceed somewhat cautiously, as $236 billion in HELOC debt originated between 2005 and 2008 is now nearing repayment.
Given that a significant number of these HELOCs are reaching the end of their borrowing period and approaching repayment, Experian is looking at how consumers are managing these payments and what those spikes and trends mean.
"During the housing boom, home equity lending was heating up, but lenders pulled back significantly as home prices began to fall," said Michele Raneri, vice president of analytics and new business development. "What we're seeing now is that home values have recovered, but the end of draw is still a factor that needs to be considered when it comes to consumer and lending behavior."
The study focuses on the HELOC trends that can affect the lending ecosystem moving forward. Topline findings include:
- $29 billion in HELOC debt originated between 2005 and 2008 has been paid down over the past 12 months, as many of these lines of credit are in or are approaching their repayment period.
- As of Q4 2015, originations were up 111 percent, to $43.03 billion from $20.44 billion in the same quarter in 2010.
- Delinquencies associated with HELOCs have decreased to near prerecession levels; in Q4 2015, 0.49 percent of consumers with an open HELOC were 90 to180 days past due.
- Consumers with a HELOC in repayment were more likely to both close and open other HELOCs in the next 12 months. They also were more likely to open or close a mortgage in the next 12 months.
The study further evaluated what could happen to these loans and other loan products. It found that consumers coming to the end of draw on their HELOC are more likely to become delinquent — not just on the HELOC, but also on other types of debt such as mortgage, auto loan, auto lease and bankcard trades — as the increase in repayment burden could mean higher monthly payments.
"Many consumers have dealt with repayment well, while others may experience payment shock," continued Raneri. "The best path forward in this situation is for consumers to fully understand this potential payment stress, use resources available to them and to work closely with their lender to navigate these changes. If consumers have good credit and equity in their homes, they most likely can refinance their HELOC."
Additional insights and information are available in the white paper at https://www.experian.com/helocanalysis.
Experian is committed to improving consumer financial literacy and is dedicated to providing the help that consumers need to better manage their credit reports and credit scores. To chat with Experian live and learn more about credit, join the conversation:
- Experian hosts a daily #CreditScope at 2:30 p.m. Eastern time on Periscope to answer questions about credit and money.
- Experian shares credit and personal finance tips (and gives a behind-the-scenes look at Experian) daily on Snapchat. Snap with us.
- Experian hosts a weekly #CreditChat on Twitter, Periscope and YouTube Live every Wednesday at 3 p.m. Eastern time with consumer credit expert Rod Griffin.
- For answers to common questions, advice and education about consumer credit, you can visit Experian's one-stop resource at http://www.experian.com/education.
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score and protect against identity theft. In 2015, we were named one of the "World's Most Innovative Companies" by Forbes magazine.
We employ approximately 17,000 people in 37 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2016, was US$4.6 billion.
Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.
Experian Public Relations
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