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Home Finance Write-Offs Decrease 30% Year-Over-Year, Reach Five-Year Low

ATLANTA, July 1, 2013 (GLOBE NEWSWIRE) -- According to Equifax's (NYSE:EFX) latest National Consumer Credit Trends Report, home finance write-offs year-to-date through May 2013 total $69.7 billion, a five-year low, and a decrease of more than 23% year-over-year ($90.8 billion YTD in 2012) and almost 45% lower than the high set over the first five months of 2010 ($126 billion). Conversely, non-home finance write-offs total $33.9 billion year to date through May 2013, a year-over-year increase of 3% from $32.8 billion.

In addition, year-over-year changes in home finance 30-day delinquency rates in May 2012 versus May 2013:

  • First mortgage: decreased more than 22% (from a rate of 8.26% to 6.40%);
  • Home equity revolving: decreased more than 22% (from 3.43% to 2.67%);
  • Home equity installment: decreased 18% (from 6.39% to 5.24%)

"Improving payment behavior and decreasing delinquencies has brought some stability to the home-finance sector. While there is still concern over the high volume of existing severely delinquent loans, otherwise known as the shadow inventory, rising home values are bringing more and more borrowers into positive equity and decreasing the likelihood that they will fall into trouble," said Equifax Chief Economist Amy Crews Cutts. "Low mortgage rates, though recently rising to a two-year high of 4% on 30-year fixed-rate mortgages, have supported strong refinance activity and pushed homebuyer affordability to new highs."

"Originations of new first mortgages have failed to keep pace with write-offs and pay-offs, but other tradelines are seeing rising total balances and growth in accounts. Total new consumer credit, excluding first mortgages, in the first quarter of 2013 is 45% higher than same time in 2010, the recent year-to-date low point. Auto loan origination activity continues outpacing other verticals, accounting for nearly half of the total new credit dollars originated in the first quarter of 2013."

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