The payments due on nearly half of all home equity lines of credit (HELOCs) are poised to increase substantially in the next three years, presaging a possible rise in HELOC delinquencies, Lender Processing Services (LPS) reported.
About half of all HELOCs were originated between 2004 and 2006, according to LPS. And until now, borrowers with loans that are part of that pool haven’t had to pay full principal and interest on them.
But since HELOC borrowers are typically required to make full payments after 10 years, payments on those loans part of that pool will begin to climb next year. So far, only 14 percent of second-lien HELOCs have passed this 10-year mark, LPS said.
