Delinquency rates on home equity lines of credit rose 11 basis points on a sequential basis in the second quarter to 1.91%, according to new figures compiled by the American Bankers Association.
The 30-day plus delinquency rate on HELOCs hit a two-year low of 1.73% in the fourth quarter of 2010 before edging up to 1.91% during the first-half of this year.
ABA Chief Economist James Chessen said the increase in delinquencies reflects continuing pressures on consumers due to high unemployment, rising gas prices, and a struggling economy. “Lackluster job creation, private sector uncertainty and public sector job cuts have stalled momentum and increased pressure on consumers," Chessen said.
Banks and thrifts held $616 billion of HELOCs at June 30, down 6% from a year ago, according to the Federal Deposit Insurance Corp. Net charge-offs on the product totaled $3.3 billion in 2Q, down 23% from a year ago.
ABA also reported the seasonally adjusted delinquency rate on closed-end second mortgages jumped 26 bps to 4.38% in the second quarter, topping the previous record of 4.32% set in the fourth quarter of 2009.
FDIC figures show that banks held $133 billion of closed-end second mortgages as of June 30, down 19% from a year ago. Net charge-offs totaled $1.4 billion, down 29% from the second quarter of 2010.
