ABA reports improved loan delinquencies

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Published: July 7,2010

Tags: banking and finance, credit, debt, loans

WASHINGTON – Consumer loan delinquencies showed broad-based improvement for the third quarter in a row, a sign of continued modest improvement in the U.S. economy, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 21 basis points to 2.98 percent of all accounts from 3.19 percent of all accounts in the previous quarter.

Bank card delinquencies fell more than half of one percent to 3.88 percent of all accounts which is below the 15-year average (3.93 percent). This is the first time since the second quarter of 2002 that bank card delinquencies have fallen below 4 percent. The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

ABA chief economist James Chessen said the improvements reflect concerted efforts by consumers to shore up their finances. “It’s clear that consumer balance sheets are improving. People are borrowing less, saving more and building wealth. These are all positive signs,” he said.

Chessen added that across-the-board improvements in housing-related loan delinquencies indicate stability is returning to the housing market. “This is the first inkling that stability is taking hold in the housing market, but the pace of recovery will still be long and drawn out,” Chessen noted.

Home equity loan delinquencies fell for the first time in two years to 4.12 percent of all accounts from 4.32 percent in the previous quarter. Home equity lines of credit delinquencies fell nearly a quarter percent to 1.81 percent of all accounts from 2.04 percent in the previous quarter.   Property improvement loan delinquencies fell to 1.40 percent of all accounts from 1.63 percent in the previous quarter.

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