Delinquencies on home equity loans hit a record high in the third quarter of the year, even while falling for most other types of consumer installment loans, according to new data from the American Bankers Association (ABA).
Home equity delinquencies rose to 4.30 percent of outstanding loans, up from 4.01 percent the previous quarter. Delinquencies on home equity lines of credit also hit a new high, reaching 2.12 percent of all accounts, up from 1.92 percent previously.
Non-housing loans improve
It was a different story for non-housing related loans, which saw falling delinquencies in all other categories tracked in the ABA’s quarterly Consumer Credit Delinquency Bulletin, released Thursday. Bank credit card delinquencies fell nearly a quarter of a percentage point, to 4.77 percent, down from 5.01 percent in the second quarter of the year.
Auto loan performance showed marked improvement as well. Direct auto loan delinquencies fell nearly half a percent to 2.04 percent, down from 2.46 percent previously, while indirect (dealer-arranged) auto loans improved to 3.15 percent, compared to 3.26 percent in the second quarter of the year.
Banks writing off bad debts
Delinquencies appear to be dropping as job losses slow and consumers strive to get their financial houses in order, paying off debt and spending less, said James Chessen, ABA chief economist. He said banks are also writing off bad loans, taking those delinquencies off the books.
“Banks are putting losses behind them, setting the stage for expanded lending to consumers as the economy recovers,” he said.
“It’s always a good sign when delinquencies decline, but they’re still relatively high,” Chessen added. “Until the economy generates more jobs and the housing sector stabilizes, they’re likely to stay that way.”
In another housing-related area, mobile home loan delinquencies rose to 3.63 percent of all loans, up from 3.53 percent the previous quarter. The ABA report does not track data on traditional home mortgages.
Overall delinquencies down
The composite ratio for all categories of loans tracked in the survey fell to 3.23 percent, down from 3.35 percent of all loans in the second quarter of the year.
Among loan categories that showed improvement, personal loan delinquencies fell to 3.74 percent of outstanding loans, down from 3.90 percent in the second quarter; property improvement loan delinquencies were down to 1.66 percent from 1.79 percent; marine loan delinquencies, down to 2.21 percent from 2.28 percent; and delinquencies on RV loans fell to 1.64 percent from 1.72 percent previously.
The ABA defines delinquency as loans 30 days or more past due. All figures are seasonally adjusted.
Written by By: Kirk Haverkamp
