Equifax: Default Rate For First Mortgages Fell To 2007 Levels In June

There were about 17,909 defaults on first mortgages in June – the lowest number since January 2007, according to the Equifax National Consumer Credit Trends Report.

Although the write-off rate returned to historic lows, some areas remain elevated. For instance, at 12.9 basis points, the write-off rate in Puerto Rico was three times higher than the national average of 3.3 basis points. In Nevada, the rate of 6.6 basis points was twice as high as the national average.

“The backlog of foreclosures from the financial crisis finally appears to be waning, and write-offs are returning to historically normal levels,” says Amy Crews Cutts, senior vice president and chief economist at Equifax, in a release. “Rising home values have helped significantly, as have improving labor markets. Given the low inventory of homes for sale and the overall improving credit profile of the U.S. consumer, we expect home sales to maintain the upward trend we’ve seen in the first half of the year and for mortgage default performance to continue its downward path.”

As of the end of June, there were about 49.8 million mortgages outstanding – an increase of 0.7% compared with June 2015. The total balance outstanding of these first mortgages was about $8.33 trillion, a year-over-year increase of 2.8%.

The severe delinquency rate (90-days past due or in foreclosure) for home equity installment loans was 1.46%, down from 1.80% in June 2015. As of the end of June, the total outstanding balance on all home equity installment loans was about $131.4 billion, a year-over-year decrease of 2.7%. The total number of outstanding loans was about 4.5 million.

The severe delinquency rate for home equity lines of credit (HELOCs) was 1.28%, down from 1.45% in June 2015. The total number of outstanding HELOCs was about 10.9 million, a year-over-year decrease of 3.4%. The total balance outstanding for all HELOCs was about $486.5 billion, a decrease of 3.5%.

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