Consumer Lending, Economy

Consumer loan delinquencies fall to record low in third quarter

Wallet MoneyData released by the American Bankers Association on Thursday showed that consumer loan delinquencies fell to a record low during the third quarter amid improved economic conditions.

The composite ratio, which follows delinquencies in eight loan categories, fell 13 basis points to 1.63 percent of all accounts, well below the 15-year average of 2.53 percent. A delinquency is defined as a late payment that is 30 days or more past due.

“More jobs and higher income are a recipe for lower delinquencies,” ABA Chief Economist James Chessen said. “Consumers also continue to do a good job of monitoring their finances and keeping debt at manageable levels.”

Bank card delinquencies rose slightly during the third quarter to 2.55 percent of all accounts but remained below the 15-year average of 3.84 percent. Home equity loan delinquencies fell from 3.83 percent to 3.58 percent in the third quarter, and home equity lines of credit fell from 1.9 percent of accounts to 1.71 percent.

Personal loan delinquencies fell from 1.94 percent to 1.51 percent. Direct auto loan delinquencies held steady at 0.88 percent, while indirect auto loan delinquencies fell to 1.64 percent in the third quarter.

“Delinquencies are likely to remain at reasonably low levels for the next several quarters as the economy continues to improve and jobs and income continue to grow,” Chessen said.  “At the same time, consumers can’t afford to be complacent when it comes to keeping debt levels under control.”

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