ABA reports 4th quarter HEL delinquency at 2.33%
By MortgageDaily.com staff
1/11/2006

Reversing the trend of rising delinquencies in the first half of 2004, more people paid their home equity loans on time during the most recent quarter. But signs of financial stress may interrupt the improvement.

Home equity loan delinquency was 2.33 percent in the third quarter, down 42 basis points from the prior three-month period and 49 BPS below a year prior, according to the American Bankers Association's latest Consumer Credit Delinquency Bulletin announcement.

"The fall in delinquencies was a welcome change, but signs of financial stress still are present," said James Chessen, ABA chief economist, in the statement. "The persistent interest rate increases by the Federal Reserve and record high gas prices in the third quarter provided a one-two punch that continued to inflict pain on personal budgets."

Additionally, although continued strong economic growth and falling gas prices in the fourth quarter bring hope that delinquencies will keep decreasing, the full impact of hurricane Katrina has yet to be felt, Chessen added. The effects from last year's storms will likely be spread across the fourth quarter 2005 and this quarter.

The report showed past-due payments on home equity lines of credit, the lowest delinquency rate category, worsened 3 BPS to 0.46 percent during the third quarter.

Meanwhile, mobile home loan delinquencies continued to fall -- down 43 BPS to 3.31 percent, ABA said.

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