Consumer loan delinquencies at record highs, says American Bankers Association

Defaults on consumer loans have hit a new all-time low, according to the American Bankers Assn., which says it’s good news for the economy as well as for the balance sheets of banks that are being hit. owes money.

Delinquencies on bank credit cards increased slightly but remained well below their historical norm. At the same time, the delinquency rate fell on personal loans and loans for cars, mobile homes, boats and recreational vehicles. There was a marked improvement in payments on home equity loans and lines of credit.

This trend reflects several factors, including lending standards that were tightened after the lending slack that created the financial crisis. Another factor is the progress of banks in writing off bad debts, which removes them from the delinquency equation.

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But James Chessen, chief economist for the Bankers Trade Group, said the slow but real improvement in the economy and consumers’ more hardline approach to debt have played a big role in improving the situation.

“I think consumers deserve a lot of credit for deleveraging and reducing their debt,” Chessen said in an interview ahead of the report’s release on Thursday.

“Additionally, jobs and income are key factors in the ability to repay debt – and the employment situation has slowly but steadily improved over the past 18 months.”

The American Bankers Association. The report counted consumer loans in arrears of at least one monthly installment that were held in banking portfolios during the third quarter.

A composite ratio of eight categories of installment loans fell from 1.76% of all accounts in the second quarter to 1.63% – a record high well below the 15-year average of 2.35%, the report said. group.

Delinquencies on bank cards fell from 2.42% of all accounts to 2.55%, well below their 15-year average of 3.84%. They have been rising and falling for several quarters at extremely low levels, Chessen said, making the plastic crime rate unlikely to drop.

30 Day Overdue U.S. Credit Card Balance Data by YCharts


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