Delinquency rates on home equity loans may have peaked during last summer, but they still remain at "troublesome" levels, according to a new report released by the American Bankers Association on Thursday.
The ABA consumer delinquency report shows that the percentage of home equity lines of credit that are 30-day or more past due dropped 24 basis points from the third quarter to 1.69% in the fourth quarter.
However, the 30-day plus delinquency on closed-end second mortgages edged down only 4 bps to 4.09 as of Dec. 31. But it's lower than the 4.38% delinquency rate reported in the second quarter.
ABA chief economist James Chessen noted substantial improvement in the performance of other consumer loans but not in the mortgage space.
“Troublesome performance in housing-related loans is keeping overall delinquency rates elevated. The housing sector continues its painful adjustment, and it will take a long time before delinquency rates return to normal,” he said.
In the fourth quarter of 2005, the delinquency rate for HELOCs was 0.51% and 2.07 for second mortgages.
Banks and thrifts held $605.6 billion in HELOCs as of Dec. 31, down only 5% from a year ago, according to Federal Deposit Insurance Corp. data. Net chargeoffs in the fourth quarter totaled $2.8 billion, down from $3.6 billion in the fourth quarter of 2010.
FDIC data also show depository institutions held $120 billion in second mortgages at the end of last year, down 18% from yearend 2010. Net charge-offs totaled $1.23 billion in the fourth quarter, compared to $1.7 billion in the fourth quarter of 2010.
