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While still elevated compared to historic levels, severely delinquent balances among first mortgages are on the decline, according to ""Equifax's"":http://www.equifax.com/home/en_us May National Consumer Credit Trends Report.
[IMAGE]The May 2012 total of delinquent balances represented $450 billion, a 37 percent decline from the peak of more than $700 billion in January 2010. Seventy percent of outstanding delinquencies among first mortgages actually remain tied to loans opened between 2005-2007.
The biggest drop was seen in severely delinquent (90-plus days) non-agency first mortgage loans, which fell 45 percent to $320 billion in May from its peak of $580 billion in January 2010. Agency-sourced (GSE, FHA, and VA) severely delinquent first mortgages declined 9 percent $130 billion from a $142 billion peak in January 2010. Home equity installment loans also saw a drop in severe delinquency rates, decreasing to $615 million-a 31 percent drop from their $880 million peak in February 2011.
""That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions,"" said Amy Crews Cutts, chief economist at Equifax. ""What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery. If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014.""
According to the report, home equity revolving balances fell from a $680 billion peak in May 2009 to $560 billion in May 2012, and total credit limits among home equity revolving accounts declined 27 percent to $1.02 trillion. Total mortgage write-offs year-to-date are down 28 percent from their 2010 peak, and home mortgage balances are down 12.5 percent from a record high of $9.8 trillion set in October 2008.
Student loan write-offs improved year-to-date, down to $4.6 billion from last year's $4.8 billion. However, that was still the second highest total posted in seven years. Data showed that total student loan amounts originated year-to-date in March 2012 ($12.9 billion) were 19.7 percent lower than the same time the previous year. The total balance of existing student loans year-to-date was $750 billion, 48 percent higher than its lowest point ($390 billion in September 2007).
From May 2010 to May 2012, bankcard balance write-off rates fell from 11 percent to less than 5 percent. Roll rates (the rate at which consumers progress from current in payments to 30-days past due) have stayed below 1 percent since February. This is the first time in more than five years that roll rates have remained at or below 1 percent for three months or longer. Bankcard balances in May were $530 billion, 28 percent below their peak in January 2009, and total bankcard credit limits remained at the $2.4 trillion level for the seventh consecutive month.
