Consumer Credit Delinquencies Fluctuate in Fourth Quarter


4/7/2017 1:01 PM

Bank card delinquencies and those for other open-end loans declined while closed-end loan delinquencies increased.

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Consumer delinquencies varied between increases for closed-end loans (such as auto loans) and a decline in open-end loans such as those for credit cards, according to the latest Consumer Credit Delinquency Bulletin from the American Bankers Association (ABA).

The composite ratio of delinquencies in eight closed-end loans (including for homes and vehicles) increased 10 basis points to 1.51 percent of all accounts—well below the 15-year average of 2.19 percent, according to a news release from the ABA.

“We’ve seen a slow rise in closed-end delinquencies over the last two quarters driven by small increases in auto delinquencies,” James Chessen, ABA’s chief economist, said in the news release. “Across all categories, delinquency levels have remained relatively low due to solid job growth, rising income and consumers’ continued efforts to manage their finances carefully.”

Bank card delinquencies, in the open-end loan category, declined five basis points to 2.69 percent of all accounts in the fourth quarter but still remain well below the 15-year average of 3.66 percent.

“Consumers’ disciplined use of credit cards continued, which kept debt levels manageable and delinquencies near historical lows,” Chessen said.

The ABA also reports home equity line of credit delinquencies declined 10 basis points to 1.06 percent of all accounts and they are now less than the 15-year average of 1.15 percent.

“Home equity loan delinquencies edged up two basis points to 2.61 percent of all accounts, holding under their 15-year average of 2.85 percent,” according to the news release.

“As the housing market continues to improve, so do home-related delinquencies,” Chessen said. “With home prices on the rise and borrowers better positioned to honor their debts, we expect that home-related delinquencies will continue their gradual downward trajectory.” 

Delinquencies, defined by the ABA as a late payment that is 30 days or more overdue, declined in all of the open-end loan categories and increased in all of the eight closed-end loan categories compared to the third quarter:

Closed End Loans:

  • The composite ratio increased from 1.41 to 1.51 percent.
  • Home equity loan delinquencies increased from 2.59 to 2.61 percent.
  • Direct auto loan delinquencies increased from 0.87 to 0.94 percent.
  • Indirect auto loan delinquencies increased from 1.62 to 1.75 percent.
  • Marine loan delinquencies increased from 0.97 to 0.99 percent.
  • Mobile home delinquencies increased from 3.11 to 4.07 percent.
  • Personal loan delinquencies increased from 1.46 to 1.56 percent.
  • Property improvement loan delinquencies increased from 0.94 to 0.98 percent.
  • RV loan delinquencies increased from 0.96 percent to 1.03 percent.

Open End Loans:

  • Home equity lines of credit delinquencies fell from 1.16 to 1.06 percent.
  • Bank card delinquencies fell from 2.74 to 2.69 percent.
  • Non-card revolving loan delinquencies fell from 1.61 to 1.57 percent.

Chessen said he is “optimistic that the improving economy will keep delinquency levels stable for the foreseeable future,” according to the news release.

“Job growth across a wide swath of industries—from services to manufacturing to high tech—is the key to maintaining low and stable delinquency rates,” Chessen said. “Lower taxes and infrastructure spending would add fuel to the economic expansion, pushing wages higher and helping to ease consumers’ financial worries.”

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