The 30-day delinquency rate on "open-end" home equity lines of credit jumped 43 basis points in the first quarter to a record high of 1.89% on a seasonally adjusted basis, according to an American Bankers Association survey.
The delinquency rate on closed-end second liens jumped 49 bps to 3.52% in the first quarter -- also a new high. "The number one driver of delinquencies is job losses," said ABA chief economist James Chessen.
He noted that 2 million Americans lost their jobs in the first three months of this year. "Even if home prices stop falling this year, employment will keep home equity delinquencies high for some time," he added.
The Federal Deposit Insurance Corp. recently reported that charge-offs on HELOCs totaled $4 billion in the first quarter, compared to $3.3 billion in the previous quarter. Charge-offs on closed-end second liens totaled $2.5 billion, a 25% increase from the fourth quarter.
Meanwhile, a new report from PMI Mortgage Insurance says that 85% of the nation's metropolitan areas are "now facing an increased risk" of lower home prices into 2011. The only good news PMI could offer is that the rate of home price declines has slowed and that falling values are making homes more affordable in many metro areas.