Outstanding first mortgage balance has been rising since its trough in 2013 and in February 2018, the amount reached $8.81 trillion, just a whisker away from the all-time industry high of $9.04 trillion recorded in 2008, according to data from the National Consumer Credit Trends Report by Equifax [1]. The report highlights trends in the auto, banking, and home lending segments.
Do these numbers mean that the market for first mortgages is heading the same way it did before the financial crisis? Not really, according to Gunnar Blix, Deputy Chief Economist at Equifax. “ Despite nearing the pre-Great Recession peak in nominal terms, the market is in a much healthier place than in 2008, with low-interest rates and normalized home prices supporting affordability,” Blix said. “Borrowers are also taking advantage of favorable used car prices and opportunities to consolidate high-interest debt with consumer finance loans.”
Outstanding first mortgage balances have added more than $1trillion in the five years between 2013 and 2018, the report indicated. Originations on home equity also rose 11 percent between February 2017 and February 2018 with volumes for originations increasing by 12.3 percent during the same period.
Between January and December 2017, 7.27 million first mortgages were originated representing a 13.2 percent decrease from the volumes in 2016. The report said that these dips were driven by fewer takers for refinance loans as interest rates rose. However, home equity line of credit (HELOC) volumes saw an increase during this period. HELOCs rose by 1.1 percent to nearly 1.45 million and home equity installment loans increased by 12.3 percent to more than 700,000 in 2017.
Despite the rise in home equity volumes during the year, the report indicated that home equity loan balances and outstanding accounts have actually been declining since 2007 with home equity loan balances down 65.2 percent from their peak in 2007 and accounts were down by 60.8 percent. Outstanding HELOC balances were also down 6.3 percent from a year ago at $418 billion, reflecting a decline of 38.2 percent from their peak of $677 billion in 2009.