Delinquencies on home equity loans and home equity lines of credit continued to fall in the third quarter, according to a report from the American Bankers Association (ABA).
Specifically, the delinquency rate for home equity loans fell 11 basis points to 2.59% of all accounts, dipping further below their 15-year average of 2.85%. Delinquencies for home equity lines of credit fell five basis points to 1.16% of all accounts – just one basis point above their 15-year average of 1.15%.
Meanwhile, delinquencies on property improvement loans increased three basis points to 0.94% of all accounts.
The report tracks delinquencies in 11 individual loan categories, also including credit cards. The composite delinquency rate increased slightly during the third quarter compared with the second quarter, meaning that although consumers are doing better at paying certain home loans on time, they got slightly behind on other types of loans.
The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
“The three-year trend of declining home equity delinquencies reflects a healthier housing market and rising home values,” says James Chessen, chief economist for the ABA. “Borrowers are on much firmer financial footing than they were just a few years ago, and greater equity gives them additional motivation to stay current on their obligations.”