Report: Consumer Delinquencies Vary in Third Quarter

Bank card delinquencies declined and overall loan delinquencies continue to remain below their 15-year averages.

1/12/2018 9:00 AM

Report: Consumer Delinquencies Vary in Third Quarter

Consumer delinquencies produced “mixed” results in the third quarter, as activity in closed-end loans (such as personal or auto loans) increased while delinquencies in key open-end loans (such as credit cards) declined, according to a news release on the latest American Bankers Association (ABA) Consumer Credit Delinquency Bulletin.

“Overall, delinquencies fell in 5 and rose in 5 of the 11 individual consumer loan categories tracked by ABA. One category (indirect auto loans) remained unchanged,” the ABA reports. “The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose 12 basis points to 1.68 percent of all accounts, but remains well below the 15-year average of 2.15 percent.”

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

“Delinquencies remained remarkably low for this late in the economic cycle,” James Chessen, ABA’s chief economist, said in the news release. “The very modest increase in closed end loan delinquencies reflects a slow movement back toward more normal levels. Jobs remain plentiful and incomes continue to rise, which has helped boost consumer confidence. The bottom line is that consumers are feeling comfortable with their finances and have a proven record of successfully meeting their financial obligations over the last several years.”

Bank card delinquencies declined 5 basis points to 2.62 percent of all accounts and remain well below their 15-year average of 3.62 percent.

“Consumers continue to take a disciplined approach to managing their credit cards, which has kept delinquencies in this category near historical lows for more than five years,” Chessen said.

Chessen added that he is, “optimistic that continued economic growth and consumer discipline will keep delinquency rates stable in the year ahead. We expect tax reform will improve the economy by creating more job opportunities and augmenting wage growth,” Chessen said. “That extra boost, combined with consumers’ continued financial discipline, should help keep delinquencies low in the near future.”

Delinquencies increased in most closed-end loan categories and declined in two out of three open-end loan categories, according to the ABA.

Closed-End Loans:

  • Composite Ratio rose from 1.56 percent to 1.68 percent.
  • Home equity loan delinquencies fell from 2.50 percent to 2.42 percent.
  • Marine loan delinquencies fell from 0.95 percent to 0.94 percent.
  • Mobile home delinquencies fell from 5.08 percent to 4.97 percent.
  • Indirect auto loan delinquencies remained at 1.84 percent.
  • Direct auto loan delinquencies rose from 1.04 percent to 1.12 percent.
  • Personal loan delinquencies rose from 1.52 to 1.90 percent.
  • Property improvement loan delinquencies rose from 0.95 percent to 1.08 percent.
  • RV loan delinquencies rose from 0.93 percent to 0.96 percent.

Open-End Loans

  • Bank card delinquencies fell from 2.67 percent to 2.62 percent.
  • Non-card revolving loan delinquencies fell from 1.59 percent to 1.57 percent.
  • Home equity lines of credit delinquencies rose from 1.07 percent to 1.08 percent.

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