The mortgage industry is starting to improve across the horizon, as borrowers strive to become current on their loans.
First home mortgage delinquencies fell 27% year-over-year, from 5.7% to 4.14%, according to the Equifax National Consumer Credit Trends Report.
The drop in 60+ day delinquencies was led by decreasing foreclosure inventory, which was down 103 basis points for subprime paper, according to a report released by analysts at JPMorgan Chase (JPM) this week.
JPM found that loss severities, however, are mixed. Alt-A and subprime severities rose 0.3% and 1.0%, respectively. Option ARM and prime severities fell 4%. The difference is unremarkable the analysts noted.
"The turnaround in home price trends over the past year is having a substantial impact on mortgage delinquency rates,” said Equifax Chief Economist Amy Crews Cutts. "As more and more homeowners find themselves back in positive equity, the incentive to default is strongly tempered."
The added improvement washed over into the home equity line of credit, with delinquency dropping nearly 24%, from 2.30% to 1.27%, the Equifax report said. Home equity installments also declined, sinking more than 20%, to 3.31% from 4.16%.
Additionally, borrowers started to take the extra step and pay off more of their debt prematurely.