Equifax: Delinquency Rates, New Credit Improving
Equifax's latest report on national consumer credit trends finds that delinquency rates for auto loans decreased more than 11 percent year over year, while new credit climbs to an eight-year high in the opening quarter of 2013.
ATLANTA — Consumer payment behavior and delinquencies are improving and new credit is increasing across mortgages, bank cards, auto and student loans, according to Equifax's latest National Consumer Credit Trends Report.
Year-over-year changes in the 60-day-plus delinquency rates for auto loans decreased more than 11 percent (from 1.24 percent to 1.09 percent). Additionally, the total balance of new credit issued between January and April 2013 was $152.7 billion, an eight-year high for that time period and an increase of more than 13 percent from the same period in 2012.
Total outstanding balances increased more than 9 percent from $745.1 billion in June 2012 to $816.4 billion in June 2013, while the total number of new loans year to date in April 2013 increased more than 10 percent from the same time a year ago, from 7 million to 7.7 million.
By source, bank-funded auto loans increased more than 19 percent year over year for the first four months of 2013, from $64.3 billion to $76.9 billion. Loans funded by finance companies increased more than 8 percent during the period, from $70 billion to $75.8 billion.
For home finance, loans 90 days or more past due declined sharply as a percentage of total balances outstanding. Delinquencies on first mortgages decreased more than 27 percent (from 5.70 percent to 4.14 percent); revolving home equity decreased nearly 24 percent (from 2.30 percent to 1.75 percent); and home equity installment loans decreased more than 20 percent (from 4.16 percent to 3.31 percent).
“The turnaround in home price trends over the past year is having a substantial impact on mortgage delinquency rates. As more and more homeowners find themselves back in positive equity, the incentive to default is strongly tempered," said Equifax Chief Economist Amy Crews Cutts. "While performance in other sectors is improving with the gradual economic recovery, we are seeing a strikingly different trend with student loan debt, which is both the fastest growing consumer debt segment and the only segment in which we're seeing rising severe delinquency rates and accelerating write-off rates."
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