Unemployment driving foreclosures, but personal debt down

Unemployment driving foreclosures, but personal debt down

Data from the Equifax credit bureau suggests that high unemployment is pushing up the rate of mortgage delinquencies, which could in turn drive personal bankruptcies and home foreclosures. A record 7.58 percent of homeowners with mortgages were at least 30 days late on payments in August, up from 7.32% in July. August saw the fourth consecutive monthly increase in delinquencies, and the report showed an accelerating pace. By comparison, 4.89% of mortgages were 30 days past due in August 2008, and in August 2007 the rate was 3.44%. The rate of subprime mortgage delinquencies is now above 41%, up from about 39% in each of the prior five months. August bankruptcy filings were up 32 percent from a year earlier, compared with a 35 percent year-over-year increase in July.

At the same time, however, the proportion of credit card accounts at least 60 days past due was down in August for the third straight month, while subprime card delinquencies also fell. The improvement in delinquency rates partly reflects risk-aversion among issuers, which have cut the number of cards by 82 million, or 19%, over the past year, while slashing credit limits by $721 billion, to about $3.6 trillion. Total consumer debt is down more than $300 billion, or almost 3 percent, from its peak in September 2008, said Dann Adams, president of Equifax's Consumer Information Solutions group, while the savings rate is nearing 5 percent, "a level we haven't seen in years."