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Consumer delinquency rates for both first mortgages and home equity lines of credit rose again in November

Consumer delinquency rates for both first mortgages and home equity lines of credit rose again in November, Equifax Inc. said Tuesday.

According to the Atlanta-based credit data company’s monthly report, home mortgages at least 30 days late reached another record of 7.91 percent of total outstanding debt, up from 7.76 percent in October and 7.65 percent the previous month. This record rate is a significant increase over the 5.83 percent rate of November 2008 and the 3.93 percent rate of November 2007.

Delinquency rates on home equity lines of credit (HELOC) have crept up from 3.39 percent in October to 3.43 percent in November, far exceeding the 2.95 percent rate of November 2008 and the 1.92 percent rate of November 2007.

“The story of 2009 continues to be one of consumer retrenchment and credit tightness as people strive to pay down debt or are forced to abandon it, and lenders more aggressively manage risk in their portfolios,” said Dann Adams, president of Equifax’s U.S. consumer information solutions business unit.

Data from Equifax shows that U.S. consumers reduced their overall debt by more than five percent or $575 billion from a year ago. First mortgage debt alone fell 5.4 percent.

As property values have dropped, new credit lines backed by homes have fallen off with them. Year-to-date, new home equity lines opened are down 47 percent compared to 2008 year-to-date totals, Equifax reported. This continues a trend from last year, when total HELOC originations were 41 percent below the total for 2007.

In addition, the company says, home equity lines have primarily been issued to lower-risk consumers. Eighty-one percent of the consumers who received HELOCs in September 2009 were considered low-risk, with Equifax risk scores of 740 and above.

“The contraction in home equity lines is a reflection of the credit crunch both consumers and small businesses are facing,” said Adams. “Restrictions in this traditional source of financing make finding credit harder than ever.”

Regionally, home equity line originations have diminished in states where home price values have been the most volatile, notably California and Florida.

California, for example, comprised almost 20 percent of line originations two years ago, but only about 7 percent in September 2009, Equifax explained in its report. The dramatic shift is also illustrated by new credit lines available in California declining from $6 billion in September 2007 to well under $1 billion today.

Data for Equifax’s credit trends report is sourced from the company’s nearly 200 million files of U.S. consumers.