Delinquencies jump for home equity loans, lines of credit

Delinquencies on home equity loans and lines of credit jumped to record levels in the third quarter, a banking trade group said Thursday.

Home equity loan delinquencies rose to a record 4.3% of such accounts from 4.01% in the second quarter, the American Bankers Assn. reported.

Delinquencies on home equity lines of credit also hit a record, climbing to 2.12% from 1.92%.

The troubles with housing debt contrasted with an improvement seen with other consumer loans, the bankers group said.

Delinquency rates fell in the third quarter on loans for cars, home improvements and even boats and recreational vehicles, reflecting a stabilizing economy as well as efforts by recession-chastened borrowers to pay down debts and moves by banks to write off dud loans as uncollectable.


The bad news on home equity debt came as Freddie Mac, the government-controlled mortgage giant, reported that the average fixed rate on a 30-year home loan this week was 5.09%, the third straight week it had been just above 5%, Freddie Mac said Thursday.

The average, which applies to loans taken out by borrowers with good credit and at least a 20% down payment or 20% home equity, was 5.14% last week and 5.1% two weeks ago. Borrowers paid an average of 0.7% of the loan amount in upfront lender charges, or points.

For much of November and December, the average 30-year fixed rate was below 5%, reflecting government support for the mortgage market, including heavy buying of mortgage-backed bonds by the Federal Reserve. Last year at this time, the 30-year fixed rate averaged 5.1%.

The 15-year fixed rate this week averaged 4.5% with an average upfront fee of 0.7%, down from last week’s 4.54% and 4.83% a year earlier.