Consumer Loan Delinquencies Decline in Fourth Quarter

Home loan and bank card delinquencies declined in the fourth quarter of 2015, according to the American Bankers Association’s latest Consumer Credit Delinquency Bulletin released Thursday.

The improving economy, employment rate and wages are helping consumers keep up with loan payments on bank cards and mortgages.

Home equity loan and lines of credit delinquencies continued a downward trend and approached their 15-year averages for the first time since the recession, according to a news release from the ABA. The drop in home loan delinquency categories occurred as home values steadily increased in the fourth quarter.

“Home equity loan delinquencies fell 23 basis points to 2.68 percent of all accounts and home equity line delinquencies fell 13 basis points to 1.18 percent of all accounts. Property improvement loan delinquencies rose 5 basis points to 0.92 percent of all accounts,” according to the ABA.

Bank card delinquencies only saw a slight decline in the fourth quarter, decreasing two basis points to 2.52 percent of all accounts. They remain well below their 15-year average of 3.70 percent.

The composite ratio of eight closed-end installment loan categories remained at the third-quarter level 1.41 percent of all accounts. The fourth quarter 2015 ratio is 13 basis points below the fourth quarter 2014 figure and remains well below the 15-year average of 2.24 percent, according to the ABA news release.

“A confluence of factors have kept delinquencies very low,” said ABA’s chief economist James Chessen in the news release. “The economy’s better, jobs are up, wages have grown and consumers are keeping a watchful eye on their finances. Even during the holiday spending season when temptation to overspend reaches its peak, consumers did a good job of ensuring expenses did not outpace income.”

Delinquencies defined by the ABA as a late payment that is 30 days or more overdue, increased in five of the 11 individual loan categories tracked in the fourth quarter.

Closed End Loans
•Personal loan delinquencies fell from 1.52 percent to 1.44 percent.
•Direct auto loan delinquencies rose from 0.74 percent to 0.75 percent.
•Indirect auto loan delinquencies rose from 1.51 percent to 1.54 percent.
•Mobile home delinquencies fell from 3.59 percent to 3.16 percent.
•RV loan delinquencies rose from 0.95 percent to 0.96 percent.
•Marine loan delinquencies rose from 1.09 percent to 1.14 percent.
•Property improvement loan delinquencies rose from 0.87 percent to 0.92 percent.
•Home equity loan delinquencies fell from 2.91 percent to 2.68 percent.

Open End Loans
•Bank card delinquencies fell from 2.54 percent to 2.52 percent.
•Home equity lines of credit delinquencies fell from 1.31 percent to 1.18 percent.
•Non-card revolving loan delinquencies fell from 1.71 percent to 1.63 percent.

Chessen said he anticipates continued consumer discipline and steady economic conditions will help keep delinquencies near historically low levels for the foreseeable future.

“The national savings rate is at one of its healthiest points since the recession and trending upward, which means people are well-positioned to repay their debts,” Chessen said. “Disciplined saving, along with steady job growth and climbing household wealth, signal that delinquency levels are likely stay near these historic lows for some time.”

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