Late Payments Rise on Home Equity Credit Lines
Late payments on U.S. home equity lines of credit rose to a 5-1/2 year high in the second quarter of 2007 but delinquencies on many other types of consumer loans fell, the American Bankers Association said on Wednesday.
In its quarterly report on consumer borrowing, the bankers group said delinquencies in repaying home equity lines of credit rose to 0.77 percent in the April-June period.
That compared to a rate of 0.60 percent in the first quarter and represented the highest rate since the fourth quarter of 2001 when the rate was 0.81 percent.
However, the rate of closed-end home equity loan delinquencies fell in the latest quarter to 1.99 percent from 2.15 percent earlier in the year, the group said.
Closed-end home equity loans consist of a fixed amount with a fixed rate while borrowers using home equity lines of credit have a capped limit and are usually subject to adjustable interest rates.
When it came to paying credit card bills in the second quarter, consumers improved, according to the report.
The delinquency rate on credit card bills fell to 4.39 percent from 4.41 percent in the first quarter, the bankers group said.
“Not surprisingly, customers may feel helpless when faced with a mortgage reset they can’t afford, but they still want to keep up with other payments,” said James Chessen, chief economist at the American Bankers Association. “People need to pay for gas and their cars so that they can get to work.”