Less mortgage debt equals more housing investments

Consumers jump back into mortgage market

The total outstanding balances of home finance and bank and retail-issued cards increased for three consecutive months for the first time in more than three years in January, according to the latest Equifax National Consumer Credit Trends report.

Home finance includes first mortgage, home equity installment and home equity revolving balances.

The report found that home finance, bank-issued credit cards and retail-issued credit cards grew by $8.59 trillion, $555.4 billion and $62.2 billion, respectively. 

"Home purchase transactions, in which first-time homebuyers take on entirely new mortgage debt and move-up buyers increase their existing mortgage debt, have finally overtaken foreclosures and accelerating pay-downs, resulting in increases home finance balances," said Amy Crews Cutts, Equifax chief economist.

"American consumers have shed more than $1.5 trillion in mortgage debt since the start of the financial crisis and only now seem interested in investing in housing again.”

The total balance of home finance write-off balances in 2013 of $149.7 billion hit a six-year low and posted a decrease of more than 30% from 2012.

Furthermore, from January 2013-2014, first mortgage balances increased 2.5%, from $7.7 trillion to $7.9 trillion: the largest year-over-year increase in more than 36 months.

Total home equity balances fell more than 6%, from $664.3 billion to $622.3 billion, while first mortgage delinquencies (30-or-more days past due or in foreclosure) decreased 22.8% from January 2013-2014.

In that same time, home equity installment delinquencies decreased 22%, as home equity revolving delinquencies decreased 10.6%.

In comparison, when it comes to bank-issued credit cards, the total number of loans outstanding is more than 315 million: the highest since October 2009. And for retail-issued credit cards, the total number of loans outstanding is more than 190 million, a 53-month high. 

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