Consumer Finance

Consumer Deliquencies Fell To Lowest Point In 15 Years Last Quarter

Consumers appear to be paying their bills, with the American Bankers Association finding consumer delinquencies fell last quarter to the lowest point in 15 years or more.

According to to a report, the American Bankers Association said the percentage of overdue closed loans came in at 1.35 percent in the second quarter, down three basis points from the first quarter. The delinquency rate in the second quarter was also the lowest since 2001 and is the fourth year in which delinquencies were below the 15-year average of 2.21 percent. The American Bankers Association said a large reason for the decline is a decrease in the 30-day delinquency rate on home equity loans, which declined four basis points from the first quarter.

“Rising home prices have restored equity, providing even more incentive for borrowers to stay current with their payments,” ABA Chief Economist James Chessen said in a news release. The report noted that delinquencies in three of the eight closed-end loan categories declined compared with the first quarter. Meanwhile, direct auto loan delinquencies increased 11 basis points to 1.56 percent.

Looking out to the future, the American Bankers Association is forecasting that delinquencies will stay near historic lows during the next several quarter thanks to consumers having a strong debt-to-income ratio and because bankers are being more stringent when lending money, paying more attention to the applicant’s ability to pay the loan back. “There are, of course, concerns surrounding the pace of the economy,” Chessen acknowledged in a follow-up interview, according to the report. “It’s been slow the first six months, and the election has added uncertainties about what the future course of the economy will be.”


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