Home » NEWS » Banking & Finance » ABA reports loan delinquencies declining

ABA reports loan delinquencies declining

WASHINGTON – Consumer loan delinquencies fell in eight of 11 loan categories in the fourth quarter of 2009, marking the second quarter in a row of broad-based improvement, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin.

The composite ratio, which tracks eight closed-end installment loan categories, fell four basis points to 3.19 percent of all accounts compared from 3.23 percent of all accounts in the previous quarter. Bank card delinquencies fell 38 basis points to 4.39 percent of all accounts which is below the five-year average (4.52 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 news is a strong indication that the economy is on an upswing.

“The fall in consumer delinquencies is a very positive and hopeful sign. Clearly, consumers are shoring up their finances and banks are putting losses behind them.  Overall, there is a prudent approach to credit,” he said.

In the auto loan categories, direct loan delinquencies fell 10 basis points to 1.94 percent of all accounts. Indirect auto loan delinquencies (arranged through auto dealers) remained even at 3.15 percent of all accounts.

Housing-related loans showed mixed results. Home equity loan delinquencies hit another record, rising to 4.32 percent of all accounts compared to 4.30 percent in the previous quarter. By contrast, home equity lines of credit delinquencies at quarter-end fell for the first time in six quarters to 2.04 percent of all accounts compared to 2.12 percent in the previous quarter.

“This first sign of  improvement has been a long time coming and is finally some positive indication that the housing market is stabilizing,” Chessen said.

Chessen says that while most consumers appear to be handling their finances well, the level of consumer credit delinquencies is still heavily tied to job creation.

“People are actively reducing their level of debt relative to their income and are rebuilding their savings,” Chessen said. “But it’s still a very stressful time for many families and this won’t disappear until more people have jobs. This will keep delinquencies elevated for the next several quarters.”


… we’d like to ask for your support. More people are reading the Mississippi Business Journal than ever before, but advertising revenues for all conventional media are falling fast. Unlike many, we do not use a pay wall, because we want to continue providing Mississippi’s most comprehensive business news each and every day. But that takes time, money and hard work. We do it because it is important to us … and equally important to you, if you value the flow of trustworthy news and information which have always kept America strong and free for more than 200 years.

If those who read our content will help fund it, we can continue to bring you the very best in news and information. Please consider joining us as a valued member, or if you prefer, make a one-time contribution.

Click for more info

About Megan Wright