For Immediate Release
October 8, 2015
ABA Media Contact: Mike Townsend
Follow us on Twitter: @ABABankers

Consumer Delinquencies Fall Significantly in Second Quarter

Lower Home Equity Delinquencies Lead Decline

*EDITORS:  ABA Chief Economist James Chessen can be scheduled for interviews by calling 202-663-5471.
WASHINGTON – Delinquencies in closed-end loans fell significantly in the second quarter, driven by a substantial drop in home equity loan delinquencies and continued financial discipline by consumers, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin.  Delinquencies fell in seven of the 11 individual loan categories.
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 17 basis points to 1.36 percent of all accounts – continuing a three-year trend of remaining well below the 15-year average of 2.27 percent.  (See Historical Graphic.) The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

dbullpic.jpg“The steady forward march of the economy has continued to strengthen consumers’ financial positions,” said James Chessen, ABA’s chief economist. “Consumers continue to impress with their ability to manage debt prudently and keep spending under control.  The drop in gas prices from last year has provided a big boost to disposable income and has freed up money that makes debt obligations a bit easier to handle.” 
Delinquencies in two of the three home-related categories continued their downward trend in the second quarter, with home equity loan delinquencies falling 22 basis points to 2.90 percent and home equity line of credit delinquencies falling 8 basis points to 1.42 percent.  Property improvement delinquencies edged up slightly, rising one basis point to 0.91 percent.
“There is a strong correlation between rising home prices and falling home-related delinquency rates,” said Chessen. "As the housing market continues to gain strength, we expect home equity loan delinquencies to continue their downward trend.”
Bank card delinquencies rose slightly in the second quarter, increasing three basis points to 2.52 percent of all accounts.  They remain well below their 15-year average of 3.74 percent and have varied by only 14 basis points since the fourth quarter of 2012.
“Credit card delinquencies remain really low by historical standards as consumers maintain their sharp focus on keeping debt at reasonable levels,” said Chessen.
Chessen expects delinquency levels to hold near record lows despite challenges on the horizon.
“A strong job market and rising incomes will go a long way toward keeping delinquencies at these historically low levels,” said Chessen.  “With global events creating more uncertainty about the pace of the U.S. economy, it’s even more important for consumers to maintain their disciplined approach to managing debt.”   (See Economic Charts.) 
The second quarter 2015 composite ratio is made up of the following eight closed-end loans.  All figures are seasonally adjusted based upon the number of accounts.
  • Personal loan delinquencies fell from 1.48  percent to 1.41 percent. 
  • Direct auto loan delinquencies rose from 0.71 percent to 0.72 percent.
  • Indirect auto loan delinquencies fell from 1.58 percent to 1.45 percent. 
  • Mobile home delinquencies rose from 3.52 percent to 3.55 percent.
  • RV loan delinquencies fell from 1.01 percent to 0.95 percent.
  • Marine loan delinquencies fell from 1.17 percent to 1.09 percent.
  • Property improvement loan delinquencies rose from  0.90 percent to 0.91 percent.
  • Home equity loan delinquencies fell from 3.12 percent to 2.90 percent.
In addition, ABA tracks three open-end loan categories:
  • Bank card delinquencies rose from 2.49 percent to 2.52 percent.
  • Home equity lines of credit delinquencies fell from 1.42 percent to 1.34 percent.
  • Non-card revolving loan delinquencies fell from 1.91 percent to 1.80 percent.
Consumer Tips
For borrowers having trouble paying down debts, ABA advises taking action -- sooner rather than later -- to solve debt problems.  Proven tips are listed below.  Additional consumer information on budgeting, saving, managing credit and more is available at  
  • Talk with creditors – the sooner you talk to them, the more options you have;
  • Don’t charge more purchases until your problems are solved;
  • Avoid bankruptcy – it’s a short-term solution with long-term consequences; and
  • Contact Consumer Credit Counseling Services at 1-800-388-2227.
Indirect auto loan:  loan arranged through a third party such as an auto dealer.
Direct auto loan:  loan arranged directly through a bank.
Delinquency:  late payment that is 30 days or more overdue.
Bank card:  a credit card provided by a bank.
Closed-end loan:  a loan for a fixed amount of money with a fixed repayment period and regularly scheduled payments.
Open-end loan:  a loan with a fixed amount of available credit but a balance that fluctuates depending on usage such as a line of credit.
The American Bankers Association is the voice of the nation’s $16 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $12 trillion in deposits and extend more than $8 trillion in loans.