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Equifax: First mortgage debt ticks up to $8.3 trillion

Economy boosts consumer confidence

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The total balance of outstanding first mortgages in January jumped to more than $8.3 trillion, an increase of 2.1% year-over-year, according to data from the February 2016 Equifax National Consumer Credit Trends Report.

"Home purchase activity accelerated in 2016 as economic conditions boosted consumer confidence," Equifax Chief Economist Amy Cutts said.

"When first-time homebuyers move into homeownership or existing homeowners upgrade to a larger, more expensive home, new debt is created,” she said. “This trend is finally dominating the accelerated amortization from borrowers paying a little extra each month or paying their mortgages in full, and foreclosure activity is also greatly diminished."

In addition, the total number of new first mortgages originated January-November 2015 increased to 7.60 million, up 43.2% annually, while the total balance of first mortgages originated in that same time was $1.79 trillion, an increase of 56.7%. 

On the other side, the total outstanding balance for home equity loans has steadily declined over the past year. Home equity installments dropped 5.1% (from $138.5 billion to $131.4 billion), while home equity lines of credit decreased of 3.7% (from $514.2 billion to $495 billion).

"With many home equity lines of credit hitting their recast into amortization we are seeing increased payoffs, reducing the debt and numbers of HELOCs outstanding,” Cutts said. “About 20% to 25% of HELOCs active a year prior to their recast anniversary will payoff and close within the year after date. Originations of new loans are not keeping pace with the payoffs."

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