Consumer Delinquencies Remain Stable in Second Quarter

Bank card delinquencies remain below 15-year average and consumers’ overall financial health is “excellent,” according to American Bankers Association economist.

10/12/2018 6:00 AM

Consumer Delinquencies Remain Stable in Second Quarter

Bank card delinquencies fell in the second quarter while a majority of other loan delinquencies remained steady, according to the American Bankers Association’s latest Consumer Credit Delinquency Bulletin.

Overall, held steady in eight of the 11 individual consumer loan categories tracked by the ABA, according to a news release on the report.

“The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose 3 basis points to 1.76 percent of all accounts, driven primarily by a 12-basis point rise in home equity loan delinquencies,” according to the news release. “Nonetheless, all other closed-end loans held steady or declined, and the overall composite ratio remains well below the 15-year average of 2.13 percent.”

Delinquencies are defined as a late payment 30 or more days overdue.

“As the economy keeps humming along, delinquencies have stayed at very low levels,” James Chessen, ABA’s chief economist, said in the news release. “Overall, consumer financial health has been excellent. Jobs are plentiful, wages are rising and savings rates have held steady at elevated levels, which paints a vivid picture conducive to low delinquencies. While delinquencies have held steady, the holiday season is fast approaching and a watchful eye on budgets is the key to successfully managing debt obligations.”

Bank card delinquencies declined 13 basis points to 2.93 percent of all accounts, remaining significantly below their 15-year average of 3.55 percent, according to the ABA.

“Consumers are spending in line with their income and managing their credit cards very well,” Chessen said. “This vigilance has kept credit card debt low relative to income for six years, and positions consumers to continue supporting our growing economy.”  

Chessen added a strong employment outlook will help delinquency levels remain low.

“We expect the strong job market to continue over the next year, which should improve household finances and help keep delinquencies in check,” Chessen said. “As always, judicious spending is the key to preventing delinquencies.”

Closed-End Loans

  • The Composite Ratio rose from 1.73 percent to 1.76 percent.
  • Direct auto loan delinquencies fell from 1.10 percent to 1.06 percent.
  • Marine loan delinquencies fell from 0.80 percent to 0.74 percent.
  • Mobile home delinquencies fell from 5.09 percent to 5.07 percent.
  • Personal loan delinquencies fell from 1.65 to 1.47 percent.
  • Property improvement loan delinquencies fell from 1.16 percent to 1.07 percent.
  • Indirect auto loan delinquencies remained at 1.93 percent.
  • RV loan delinquencies remained at 0.78 percent.
  • Home equity loan delinquencies rose from 2.31 percent to 2.43 percent

Open-End Loans

  • Bank card delinquencies fell from 3.06 percent to 2.93 percent.
  • Home equity lines of credit delinquencies rose from 1.14 percent to 1.15 percent.
  • Non-card revolving loan delinquencies rose from 1.56 percent to 1.57 percent.

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