For Immediate Release
October 5, 2017
ABA Media Contact: Mike Townsend
(202) 663-5471
Email: mtownsend@aba.com
Follow us on Twitter: @ABABankers

ABA Report: Consumer Delinquencies Show Improvement in Second Quarter

​WASHINGTON – Delinquencies in closed-end loans held steady in the second quarter as bank card delinquencies fell and home-related categories continued their return to normal levels, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin. Overall, delinquencies fell in 8 of the 11 individual consumer loan categories tracked by ABA. 
 
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, remained at 1.56 percent of all accounts – well below the 15-year average of 2.16 percent. (See Historical Graphic.)  The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
 
“We’re in the ninth year of economic expansion when you might expect the pendulum to begin swinging the other way, but delinquencies remain below historical levels as consumers continue to show great command of their finances,” said James Chessen, ABA’s chief economist. “The outlook remains very positive, as the strong job market, growing wages and rising wealth provide the financial wherewithal for consumers to keep current on their financial obligations.” 
 
Delinquencies in bank cards (credit cards provided by banks) fell 7 basis points to 2.67 percent of all accounts and remain significantly below their 15-year average of 3.64 percent.
 
“Consumers continue to manage their credit cards very well,” Chessen said.  “Quarter after quarter, Americans have succeeded at keeping credit card balances low in relation to their disposable income.”
 
Delinquencies in all three home-related categories decreased. Home equity loan delinquencies fell 9 basis points to 2.50 percent of all accounts, dipping further under their 15-year average of 2.94 percent. Home equity line of credit delinquencies fell 4 basis points to 1.07 percent of all accounts and remain below their 15-year average of 1.18 percent. Property improvement loan delinquencies fell 3 basis points to 0.95 percent of all accounts, well below their 15-year average of 1.33 percent. 
 
“Home equity-related delinquencies fell across the board as the housing market continued to improve, and they’re now back down to levels last seen in 2008,” said Chessen. “Increased property values and greater home equity have provided a strong incentive for people to remain current on their home loan obligations.” 
 
Delinquencies in indirect auto loans (those arranged through a third party such as an auto dealer) rose only 1 basis point to 1.84 percent of all accounts, but remain well below their 15-year average of 2.19 percent. Delinquencies in direct auto loans (those arranged directly through a bank) also rose 1 basis point to 1.04 percent of all accounts, remaining well under their 15-year average of 1.56 percent.
 
Chessen is encouraged by current economic conditions and consumer behavior, and remains cautiously optimistic amid uncertainty that lies ahead.
 
“A strong economy and good consumer practices point toward steady delinquency levels in the near term, but we are also mindful that the hurricanes may have made repayment of debts challenging for consumers in the path of the storms,” Chessen said. “It will take several quarters to fully gauge the regional and nationwide impact the hurricanes will have on consumers’ financial footing.” (See Economic Charts.)     
 
The second quarter composite ratio is made up of the following eight closed-end loans.  All figures are seasonally adjusted based upon the number of accounts.
 
CLOSED-END LOANS
  • Composite Ratio remained at 1.56 percent.
    • Home equity loan delinquencies fell from 2.59 percent to 2.50 percent.
    • Marine loan delinquencies fell from 1.02 percent to 0.95 percent.
    • Personal loan delinquencies fell from 1.54 to 1.52 percent.
    • Property improvement loan delinquencies fell from 0.98 percent to 0.95 percent.
    • RV loan delinquencies fell from 1.02 percent to 0.93 percent.
    • Direct auto loan delinquencies rose from 1.03 percent to 1.04 percent.
    • Indirect auto loan delinquencies rose from 1.83 percent to 1.84 percent.
    • Mobile home delinquencies rose from 4.86 percent to 5.08 percent.
In addition, ABA tracks three open-end loan categories:
 
OPEN-END LOANS
  • Bank card delinquencies fell from 2.74 percent to 2.67 percent.
  • Home equity lines of credit delinquencies fell from 1.11 percent to 1.07 percent.
  • Non-card revolving loan delinquencies fell from 1.64 percent to 1.59 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 ABA.com/Consumers.  
  • 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.
Glossary
 
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.
Non-card revolving loan: an unsecured, open-end loan that is not linked to a credit card. Examples may include lines of credit for overdraft protection or check credit.
 
The American Bankers Association is the voice of the nation’s $17 trillion banking industry, which is composed of small, regional and large banks that together employ more than 2 million people, safeguard $13 trillion in deposits and extend more than $9 trillion in loans.
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