Equifax: Debt Climbs for First Mortgages, but Declines in Home Equity Lending

Mar 08, 2016, 08:00 ET from Equifax Inc.

ATLANTA , March 8, 2016 /PRNewswire/ -- According to data from the February 2016 Equifax National Consumer Credit Trends Report, the total balance of outstanding first mortgages in January is more than $8.3 trillion, an increase of 2.1 percent from same time a year ago. Conversely, during that same period, the total outstanding balance for home equity loans has steadily declined. The changes include:

  • Home equity installment: a decrease of 5.1 percent (from $138.5 billion to $131.4 billion); and
  • Home Equity Lines of Credit (HELOCs): a decrease of 3.7 percent (from $514.2 billion to $495 billion);

 

"Home purchase activity accelerated in 2016 as economic conditions boosted consumer confidence," said Amy Crews Cutts, Chief Economist at Equifax. "When first-time homebuyers move into homeownership or existing homeowners upgrade to a larger, more expensive home, new debt is created. This trend is finally dominating the accelerated amortization from borrowers paying a little extra each month or paying their mortgages in full, and foreclosure activity is also greatly diminished."

"With many home equity lines of credit (HELOCs) hitting their recast into amortization we are seeing increased payoffs, reducing the debt and numbers of HELOCs outstanding. About 20 to 25 percent of HELOCs active a year prior to their recast anniversary will payoff and close within the year after date. Originations of new loans are not keeping pace with the payoffs."

The total number of existing first mortgages is 50.1 million, an increase of 0.4 percent from January 2015-2016. In that same time, the total number of HELOCs and home equity installment loans declined 3.2 percent and 2.5 percent, respectively.

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

First Mortgage

  • The severe delinquency rate (as a share of balances 90-days past due or in foreclosure) is 1.75 percent, down from 2.50 percent same time a year ago;
  • The total number of new first mortgages originated January-November 2015 was 7.60 million, a year-over-year increase of 43.2 percent;  and
  • Similarly, the total balance of first mortgages originated in that same time was $1.79 trillion, an increase of 56.7 percent.

Home Equity Installment

  • The severe delinquency rate (as a share of balances 90-days past due or in foreclosure) is 1.63 percent, down from 2.12 percent same time a year ago;
  • The total number of new loans originated January-November 2015 was 760,900, a 32.4 percent increase from same time a year ago. Similarly, the total balance of new loans in that same time was $25.1 billion, an increase of 25.2 percent.

Home Equity Lines of Credit (HELOC)

  • The severe delinquency rate (as a share of balances 90-days past due or in foreclosure) is 1.34 percent, down from 1.49 percent same time a year ago;
  • From January-November 2015, the total balance of new loans was $135.3 billion, a 21.6 percent increase from same time a year ago. In that same time, the total number of new loans originated was more than 1.29 million, an increase of 13.1 percent; and
  • The utilization rate as a percentage of outstanding balances is less than 51 percent, its lowest level since September 2008.

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 210 million consumers.

About Equifax

Equifax powers the financial future of individuals and organizations around the world. Using the combined strength of unique trusted data, technology and innovative analytics, Equifax has grown from a consumer credit company into a leading provider of insights and knowledge that helps its customers make informed decisions. The company organizes, assimilates and analyzes data on more than 800 million consumers and more than 88 million businesses worldwide, and its databases include employee data contributed from more than 5,000 employers.

Headquartered in Atlanta, Ga., Equifax operates or has investments in 21 countries in North America, Central and South America, Europe and the Asia Pacific region. It is a member of Standard & Poor's (S&P) 500® Index, and its common stock is traded on the New York Stock Exchange (NYSE) under the symbol EFX. Equifax employs approximately 9,200 employees worldwide.

Some noteworthy achievements for the company include: Ranked 13 on the American Banker FinTech Forward list (2015); named a Top Technology Provider on the FinTech 100 list (2004-2015); named an InformationWeek Elite 100 Winner (2014-2015); named a Top Workplace by Atlanta Journal Constitution (2013-2015); named one of Fortune's World's Most Admired Companies (2011-2015); named one of Forbes' World's 100 Most Innovative Companies (2015). For more information, visit www.equifax.com.

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SOURCE Equifax Inc.



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