Average Home Equity Line Up

According to CBAs Home Equity Study for the year ending June 30, 2003, the average size of new home equity line commitments was $69,513, up 26% from the prior year’s $55,307. Home equity loan commitments grew 44% to $58,054.

The Virginia-based association says it provides research and leadership on retail banking issues and that its members include large national bank holding companies, and regional and super community banks that collectively hold two-thirds of the industry’s total assets. The study is based on information given by 32 institutions, of which 42% reported an asset size of more than $50 billion, and a majority were commercial banks.

Combined, line and loan portfolios grew 29%, after subtracting 30% of runoff from new home equity bookings of 59%. Runoff typically occurs when a consumer refinances their first mortgage and pays off home equity credit, said CBA. Last year, the combined portfolio grew 31%.

CBA reported that for the line part of the portfolio growth, the delinquency rate fell from the previous year’s 0.94% to 0.61%. For the loan part, the rate rose from 1.00% to 1.55%. For the last three years, the delinquency rate, which is derived from payments more than 30 days late, has dropped for lines and increased for loans.

The study also revealed lower home equity subprime lending among the banks. Subprime loans — for customers with credit scores below 630 — were 7% of line accounts, down from 13% in 2002. Meanwhile, these loans were 16% of loan accounts, compared to 18%.