Home Equity Delinquency Rate Improves

The percentage of home equity loans that were overdue fell 5 basis points to 1.89% at banks in the second quarter, the American Bankers Association has reported.The delinquency rate on home equity lines of credit also improved, falling 3 bps to 0.52%. The improvement came despite a slight increase in overall consumer loan delinquencies. ABA chief economist James Chessen said that, while consumers continue to be pressured by higher short-term interest rates and high gas prices, those pressures may ease in the third quarter. However, he said weakening housing markets will make it more difficult for consumers to use home equity gains as a source of liquidity. "It's a different world now, and consumers will need to be more careful in managing their finances." The ABA can be found on the Web at http://www.aba.com.