Delinquency rates across home, auto and credit card finance accounts have demonstrated double-digit percentage declines from July 2011-2012, according to Equifax's monthly National Consumer Credit Trends Report. In descending order, notable year-over-year dollar-based declines include ...
►Auto loan 60-day plus delinquency rates declined 35%
►Consumer finance 60-day plus delinquency rates declined 23%
►Bank credit card 60-day plus delinquency rates declined 21%
►First mortgage severe derogatory rates (primarily loans transitioning to real estate-owned (REO) status) rates declined 17%
►First mortgage 30-day plus delinquency rates declined 15%
►Home equity revolving 30-day plus delinquency rates declined 7%
"Consumers continue to improve their credit management, through higher monthly payments on card accounts, refinancing of existing mortgage debt at lower rates, and lower delinquency rates pretty much across the board," said Equifax Chief Economist Amy Crews Cutts. "Growth in total credit is consistent with the overall improvement in the economy—slow, but steady—with the exception of mortgage debt which is declining overall."
Accompanying the improving delinquency rates is the rise in new credit, which increased 13 percent from year-to-date in May 2011 ($305 billion) to May 2012 ($348 billion). The highest new credit increase was seen with bank credit cards (21 percent versus the same period a year ago), which went from $58.1 billion through May 2011 to $72.9 billion through May 2012.
"The decline in mortgage debt is due to loans converting to real estate-owned at the end of the foreclosure process, homeowners paying down debt faster through cash-in refinancing, or shortening of the mortgage term, as well as borrowers curtailing the debt by adding a bit extra to their payment each month," said Cutts.