Consumer delinquencies fell to a record low in the third quarter last year, declining in seven out of 11 categories, according to the American Bankers Association’s (ABA) Consumer Credit Delinquency Bulletin.
The ABA’s composite ratio, which tracks consumer delinquencies across eight closed-end installment loan categories, fell 6 basis points to 1.51 percent of all accounts. The composite’s 15-year average has been 2.3 percent.
"Strong economic growth has boosted job creation and supported income growth, which has made it easier for consumers to meet their financial obligations," James Chessen, the ABA’s chief economist, said in a statement. "Lower gas prices helped free up resources for everything from new purchases to debt repayment."
While delinquencies, which the ABA defines as a payment that is overdue by 30 days or more, declined across categories like personal loans, home equity loans and indirect auto loans, bank card delinquencies increased slightly during the third quarter following two consecutive quarters of declines. Bank card delinquencies ticked up eight basis points to 2.51 percent of all accounts, still remaining below their 15-year average of 3.77 percent.
Mobile home delinquencies also increased slightly, from 3.56 to 3.64 percent, and so did home equity lines of credit, which increased two basis points to 1.52 percent. Direct auto loan delinquencies remained flat at 0.72 percent.
"Consumers are on surer financial footing, which bodes well for future delinquency rates," Chessen said. "Consumers are smiling every time they fill up their tanks. Every one-cent decline in pump prices puts about $1 billion back into consumers’ pockets, which means their paychecks are going much further. The signs are pointing in the right direction, but consumers hold all the cards when it comes to continuing to prudently manage their finances."
The third quarter composite ratio was made up of the following closed-end loans:
• Personal loan delinquencies fell from 1.62 percent to 1.51 percent.
• Direct auto loan delinquencies remained at 0.72 percent.
• Indirect auto loan delinquencies fell from 1.55 percent to 1.51 percent.
• Mobile home delinquencies rose from 3.56 percent to 3.64 percent.
• RV loan delinquencies fell from at 1.09 percent to 1.03 percent.
• Marine loan delinquencies fell from 1.34 percent to 1.21 percent.
• Property improvement loan delinquencies fell from 0.97 percent to 0.82 percent.
• Home equity loan delinquencies fell from 3.36 percent to 3.24 percent.
The composite also tracked the following open-end loan categories:
• Bank card delinquencies rose from 2.43 percent to 2.51 percent.
• Home equity lines of credit delinquencies rose from 1.5 percent to 1.52 percent.
• Non-card revolving loan delinquencies fell from 1.92 percent to 1.68 percent.
