Home Equity Originations Increase for First Time Since 2006

July 12, 2011 (Jeff Alan)

Year-over-year new home equity loan originations, though in smaller amounts due to falling home values, increased 6.6 percent for the first time since March 2010 according to the latest Credit Trend Report released by Equifax.

Overall, U.S. consumer credit continues to show signs of improvement despite strong unemployment and a weak housing market.

The report, which tracks consumer credit trends through March 2011, states that on a year-to-date (YTD) basis compared to March 2010, new credit dollars are increasing with originations in auto, bank card, consumer finance, and home equity revolving lines of credit.

Total new credit YTD has increased more than 15 percent since 2009 to $167 billion, with year-over-year auto lending and credit card limit increases expanding for the first time after two years of declines.

Total consumer debt now stands at $11.3 trillion, down 8.7 percent from October 2008’s $12.4 trillion.

“Despite concerns of the economy relapsing, several current metrics indicate the credit cycle is stabilizing – even growing somewhat as consumer payment behavior improves,” said Michael Koukounas, Equifax’s Senior Vice President of Client Services.

Consumers continued to show improvement in payment behavior as the percent of consumer risk scores defined as high risk dropped. The average Equifax Risk Score, which predicts the likelihood of a serious delinquency within 24 months, reached 695 in May 2011.

Tags: Equifax, home equity loans, consumer credit, auto loans, bank cards, consumer finance, credit cycle

Source:
Equifax