Home finance write-offs year-to-date through May reached a five-year low of $69.7 billion, Equifax claims in a new report.

This is a 23% decrease from May 2012, when write-offs totaled $90.8 billion year-to-date. 

Last month’s total is also 45% below the high, which was set over the first five months of 2010 at $126 billion. 

Conversely, non-home finance write-offs total $33.9 billion year-to-date through May 2013 have actually increased 3% from $32.8 billion. 

“Improving payment behavior and decreasing delinquencies has brought some stability to the home-finance sector. While there is still concern over the high volume of existing severely delinquent loans, otherwise known as the shadow inventory, rising home values are bringing more and more borrowers into positive equity and decreasing the likelihood that they will fall into trouble,” said Equifax Chief Economist Amy Crews Cutts. 

Cutts added, “Low mortgage rates, though recently rising to a two-year high of 4% on 30-year fixed-rate mortgages, have supported strong refinance activity and pushed homebuyer affordability to new highs.” 

Additionally, year-over-year changes in home finance 30-day delinquency rates in May 2012 compared to May 2013 saw improvement as well. 

First mortgage delinquency rates dropped more than 22% from a rate of 8.26% to 6.40%, while home equity revolving delinquencies fell more than 22% as well, from 3.43% to 2.67% of the loans studied. Meanwhile, home equity installment delinquency rates decreased 18% from 6.39% to 5.24%. 

Interestingly, 65% of severely delinquent balances are from loans opened between 2005 and 2007. Also, the total number of new loans in the first quarter of 2013 reached 211,000, more than a 10% increase from a year earlier.

The total balance of new credit rose more than 15% in that same time, from $17.6 billion to $20.2 billion. Both new loans and new credit for the first quarter of the year are four-year highs for that time period. 

“Originations of new first mortgages have failed to keep pace with write-offs and pay-offs, but other tradelines are seeing rising total balances and growth in accounts,” said Cutts.


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