Home-Equity Loans Record Delinquency Rate

July 7, 2009 10:20am by Barry Ritholtz

There have been 6.5 million jobs lost since the recession began in December 2007. Another 2.5 million formerly full time employees have been downgraded to working part–time.

Employment is the single biggest factor impacting late and delinquent credit payments. That makes this “no green shoots here either” data point inevitable:

“Late payments on home-equity loans rose to a record in the first quarter as 18 straight months of job losses and a slumping economy left more borrowers unable to pay their debts, the American Bankers Association reported.

Delinquencies on home-equity loans climbed to 3.52 percent of all accounts from 3.03 percent in the fourth quarter, and late payments on home-equity lines of credit climbed to a record 1.89 percent, the group reported today. An index of eight types of loans rose for a fourth straight quarter, to 3.23 percent from 3.22 percent in October through December, the group said. . .

Delinquent bank-card accounts jumped to a record 6.60 percent of outstanding card debt in the first quarter from 5.52 percent in the previous period, a signal unemployed borrowers are relying on cards as falling prices erode the equity in their homes. More borrowers are using cards to meet daily expenses after losing their jobs, the ABA said.”

Here are some specifics:

• Home equity loan delinquencies increased from 3.03% to 3.52%.
• Personal loan delinquencies increased from 2.88 % to 3.47 %.
• Direct auto loan delinquencies increased from 2.03 % to 3.01 %.
• Mobile home loan delinquencies increased from 2.96 % to 3.70 %.
• Property improvement loan delinquencies decreased from 1.75 % to 1.46 %.
• Indirect auto loan delinquencies decreased from 3.53% to 3.42%.
• Marine loan delinquencies decreased from 2.35 % to 2.04 %.
• RV loan delinquencies increased from 1.38 % to 1.52 %.

I would love to get dollar amounts for each category. How large is the Boat and RV credit market?

There are some improvements in the list, but overall, the credit situation remains not pretty.

Source:
Consumer Delinquencies Rose Again in the First Quarter
ABA, July 7, 2009
http://www.aba.com/Press+Room/070709DelinquencyBulletin.htm

Delinquencies on U.S. Home-Equity Loans Reach Record
Margaret Chadbourn
Bloomberg, July 7 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=axMDObJEk6eA

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