ABA report finds shrinking loan delinquencies
by Wally Northway
Published: January 8,2010
WASHINGTON — Consumer loan delinquencies fell in seven loan categories, marking the first time since 2007 that so many loan categories experienced declines, according to the American Bankers Association’s (ABA’s) “Consumer Credit Delinquency Bulletin.”
The composite ratio, which tracks eight closed-end installment loan categories, fell 12 basis points to 3.23 percent of all accounts compared to 3.35 percent of all accounts in the previous quarter. Bank card delinquencies fell 24 basis points to 4.77 percent of all accounts.
The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
ABA chief economist James Chessen said the news was positive, but the weak economy and job losses continue to weigh on consumers.
“Delinquencies may be near their peak as job losses have slowed. Consumers are working hard to get their financial houses in order by spending less, saving more and paying down debt. But there’s still a bumpy road ahead with many people unemployed and family budgets stretched to their limits,” Chessen said.
Chessen also attributed the lower delinquency rates to banks writing off bad loans.
“Banks are putting losses behind them, setting the stage for expanded lending to consumers as the economy recovers,” he said.
Auto loans showed continued improvement. Direct auto loan delinquencies fell nearly half a point to 2.04 percent of all accounts and indirect auto loan delinquencies (arranged through auto dealers) dropped to 3.15 percent of all accounts, compared to 3.26 percent of all accounts in the previous quarter.
Housing-related loans continued to show stress. Home equity loan delinquencies hit another record, jumping 29 basis points to 4.30 percent of all accounts. Home equity lines of credit delinquencies also hit a new record, rising 20 basis points to 2.12 percent of all accounts. Mobile home delinquencies increased to 3.63 percent of all accounts from 3.53 percent of all accounts in the previous quarter.
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