Delinquency rates to rise next year – study

Joe Mellman (pictured), TransUnion’s SVP and mortgage business leader, noted that tappable home equity had grown to record highs of nearly $20 trillion this year, adding that this trend is expected to continue into 2023.

“Currently homeowners have over $600 billion in non-mortgage debt and this is anticipated to increase in 2023 as inflation takes its toll on consumer wallets. Homeowners can considerably reduce their monthly expenses by tapping their home equity to pay off existing debt,” he said.

Speaking to Mortgage Professional America (MPA) he added that home equity would counteract the impact of increased delinquency rates.

He said: “Even though (tappable) home equity is going to tick down next year, it’s still going to be sitting around $18 trillion dollars again – that’s multiple times Japan’s total economy. That tends to moderate the downside of delinquencies because consumers have a cushion and can tap into that.”

Mellman also downplayed the rise in delinquencies, pointing out that the 1.4% year over year rise was still “not very high”.