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Credit is opening up for autos and other consumer purchases but purchase mortgages account for only a small percentage of the improving picture despite the fact that mortgage delinquencies are down 37 percent among first mortgages since January 2010.

Mortgage Credit Lags Rebound in Consumer Credit

Credit is opening up for autos and other consumer purchases but purchase mortgages account for only a small percentage of the improving picture despite the fact that mortgage delinquencies are down 37 percent among first mortgages since January 2010.

Speaking at a conference yesterday on “Real Estate, Credit and the Economy,” Trey Loughran, President of Personal Information Solutions at Equifax, said the availability of credit has improved about 30 percent overall since the trough of the recession but still has a long way to go.

“Of the 30 percent increase in credit availability, mortgages account for only five percent despite the fact that delinquencies are down across the board,” said Loughran.

Yesterday Equifax released its latest US Credit Trends report, showing that 30-dqy delinquency rates on first mortgages are down 13.5 percent from a year ago. First mortgage “Shadow Inventory” levels are declining, but still elevated.

Equifax’s May National Consumer Credit Trends Report confirmed that severely delinquent balances among first mortgages are on the decline. While still elevated relative to historic levels, the May 2012 total of $450 billion in delinquent balances represents a 37 percent decline from the peak of more than $700 billion in January 2010. Of note is that 70 percent of outstanding delinquencies among first mortgages still remain tied to loans opened between 2005 and 2007.

Doug Walker, Vice President of Churchill Mortgage in Nashville, another panelist, said that tightened guidelines for mortgages imposed between 2006 and 2010 have “just started to loosen a tad.” He noted that very few mortgages require 20 percent down today, and that consumers have options for low or no down payment loans through FHA, VA, USDA and down payment assistance programs financed through state and local housing authorities.

Purchase applications declined 3 percent from a year ago, according to the Mortgage Bankers Association’s weekly applications survey released yesterday, but median FICO scores and loan-to-value ratios for purchase loans have loosened very slightly, up one to four points since last August, according to Ellie Mae’s May Origination Insight Report. However, more progress has been made on refinancings than purchase loans.

Also participating in the conference were Greg McBride, Vice President and Senior Financial Analyst for Bankrate.com; and Steve Ely, CEO of eCredable. The four experts discussed the mid-2012 trends in real estate and credit and how they act as key indicators on the state of our economy. Equifax will also release its newest credit report, detailing how Americans are spending their money and how they are handling their debt.

The panelists presented new figures on American attitudes toward the economy and their personal finances, consumer credit, the mortgage industry and the state of real estate.

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