The performance of home-equity lines of credit took a turn for the better in the second quarter as delinquency rates dropped but net charge-offs spiked up 30%.
The Federal Deposit Insurance Corp. (FDIC) reported that 1.73% of HELOCs are 90 days or more past due or considered uncollectible, down 25 basis points from the previous quarter.
"Noncurrent home-equity and junior-lien mortgages declined for the first time in six quarters," FDIC chairman Sheila Bair said.
The noncurrent rate on closed-end second liens fell to 3.26% in the second quarter from 3.8% in the prior quarter. FDIC-insured institutions charged-off $5.1 billion in HELOCs and $2.7 billion in junior liens in the second quarter.