Equifax: Mortgage balances near pre-recession highs

Latest trends report includes consumer data from auto, banking and mortgage industries

ATLANTA – Outstanding first mortgage balances in February 2018 reached a total of $8.81 trillion, adding more than $1 trillion since the trough in 2013, and nearing the industry all-time high of $9.04 trillion recorded in 2008, according to data from the latest Equifax National Consumer Credit Trends Report.

The latest report also found:

  • Total outstanding balances on auto loans & leases have increased 4.8 percent year-over-year to $1.24 trillion. The number of outstanding accounts has increased 3.8 percent from a year ago to 85.6 million;
  • Home Equity loan originations were up 11.0 percent and volume up by 12.3 percent during the same time frame; and
  • Outstanding consumer finance revolving accounts grew 5.3 percent over the past year, from 49.3 million in February 2017 to 51.9 million in February 2018.

“Despite nearing the pre-Great Recession peak in nominal terms, the market for first mortgages is in a much healthier place than in 2008, with low interest rates and normalized home prices supporting affordability,” said Gunnar Blix, Deputy Chief Economist for Equifax. “Borrowers are also taking advantage of favorable used car prices and opportunities to consolidate high-interest debt with consumer finance loans.”

Additional data from the Equifax National Consumer Credit Trends Report includes:

28.10 million auto loans and leases, totaling $611.3 billion, were originated January-December 2017, representing a 3.5 percent decrease in total new accounts, and a 1.1 percent decline in balances over the prior year, reflecting a market shift from new to used cars.

January through December 2017, 9.2 percent of auto leases were issued to consumers with a subprime credit score, the smallest subprime share since 2011.

The severe delinquency rate, or share of balances 60-plus days past due, on auto loans and leases in February 2018 is 1.13 percent; up only slightly from 1.08 percent in February 2017. Auto write-offs are at 24.5 bps, which is down from 24.9 bps a year ago.

For January-December 2017, 7.27 million first mortgages were originated, representing a 13.2-percent decrease from the same period in 2016, driven by fewer refinances as interest rates rise. In contrast, nearly 1.45 million HELOCs and 771,300 home equity installment loans were originated for the same timeframe, representing 1.1 percent and 12.3 percent increases from the previous year, respectively.

Home equity loan balances and accounts outstanding have been steadily declining since their respective peaks at the end of 2007. Balances are down 65.2 percent from peak, while accounts are down 60.8 percent as of January 2018.

Outstanding HELOC balances are $418 billion. This is a 6.2-percent decrease in total balances from a year ago, and a 38.2 percent decline from the May 2009 peak of $677 billion.

63.7 million bankcards, 38.7 million private label cards, 26.8 million consumer finance loans and 15.6 million student loans were originated from January-December 2017, a 4.4 percent decrease, 10.0 percent decrease, 1.6 percent increase and a 1.3 percent decrease from the same period a year ago, respectively.

Outstanding balances have increased 7.2 percent for bankcards, 0.1 percent for private label cards, 8.3 percent for consumer finance loans, and 4.9 percent for student loans year-over-year, respectively.

The total dollar amount of student loans originated January-December 2017 is $113.6 billion, a 3.0 percent increase over the previous year, as the average loan amount increased 4.0 percent.

“Consumers benefit from these trends as well,” said Blix. “Understanding how auto markets are shifting and learning which credit markets have favorable terms can help them make more informed personal decisions.”

Leveraging data from the Equifax U.S. Consumer Credit database of more than 210 million consumers, the Equifax National Consumer Credit Trends Report reveals population-level debt and lending insights, including originations, balances, number of loans, delinquencies and more.

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