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Equifax: Home Equity Credit Hits Three-Year High

Home equity revolving credit hit a three-year high in July, signaling continued growth in housing confidence, ""Equifax"":http://www.equifax.com/home/en_us said in a report.


The company's October _National Consumer Credit Trends Report_ showed new home equity revolving lines of credit totaled more than $44 billion year-to-date through July. July's total was an approximately 9 percent increase from the recession low of $40.6 billion set in the first seven months of 2010.

Home equity revolving lines of credit peaked at approximately $680 billion in May 2009 and have since fallen about 21 percent to $537 billion as of September 2012, Equifax reported.

The number of new revolving home equity lines of credit year-to-date through July stood at 495,000, a three-year high. However, that number is still historically low, resting 76 percent below that seven-year high of more than 2 million from January-July 2006.

Since November 2007, the total number of home equity revolving accounts has declined more than 34 percent, falling from 14.7 million then to 11 million in September 2012.

""Increasing new home equity revolving credit indicates homeowner confidence and momentum towards an improved market,"" said Craig Crabtree, SVP and general manager of Equifax Mortgage Services. ""While the levels are significantly lower when compared to pre-recession peaks, the recent stability has given way to consistent growth.""

Equifax's report also revealed the total balances of severely delinquent mortgages have fallen 41 percent since peaking at $714 billion in March 2010. As of September, the total balances were at an estimated $419 billion. The report noted that more than 76 percent of severely delinquent balances among home equity revolving credit balances are sourced from originations made between 2005-2007.

Severely delinquent balances among mortgages sourced from the FHA, Fannie Mae, and Freddie Mac have fallen more than 13 percent to $125 billion since peaking in March 2010, the report said. Mortgages sourced from private investors and banks have fared better, posting a 48 percent decrease in severely delinquent balances.

First mortgages originated between 2005-2007 continued to show weakness: Though they represent less than 27 percent of all first mortgages outstanding, they comprise 68 percent of severely delinquent mortgage balances.

Crabtree said while total first mortgages are still contracting├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øfalling 3.4 percent year-over-year in September├â┬ó├óÔÇÜ┬¼├óÔé¼┬Øthe decreasing debt and delinquencies ""are positive signs of a stable foundation towards recovery.""


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