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For Immediate Release
October 6, 2016
ABA Media Contact: Mike Townsend
(202) 663-5471
Follow us on Twitter: @ABABankers

Consumer Delinquencies Fall Slightly in Second Quarter

Lower Home Equity Loan Delinquencies Drive Decline

​WASHINGTON – Delinquencies in closed-end loans fell slightly in the second quarter, driven by a 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 three of the 11 individual loan categories compared to the previous quarter. 
2QDBull.jpgThe composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 3 basis points to 1.35 percent of all accounts – a record low. This also marked the third year that delinquency rates were below the 15-year average of 2.21 percent. (See Historical Graphic.)  The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
“Consumers have become more confident over the past two years and for good reason – their financial picture is improving and their paychecks have finally started to rise as we near full-employment levels,” said James Chessen, ABA’s chief economist. “Quarter after quarter, consumers continue to build a stronger balance sheet as they earn more, save more and keep debt levels low relative to income.”
Home equity loan delinquencies fell 4 basis points to 2.70 percent of all accounts, which helped drive the composite ratio down. Other home related delinquencies increased slightly, with home equity line delinquencies rising 6 basis points to 1.21 percent of all accounts and property improvement loan delinquencies rising 2 basis points to 0.91 percent of all accounts. Home equity loan delinquencies dipped further below their 15-year average of 2.85 percent, while home equity line delinquencies remained just above their 15-year average of 1.15 percent.
“Small ups and downs are expected, but improvement is still very much in the cards for home-related delinquencies,” said Chessen. “Rising home prices have restored equity, providing even more incentive for borrowers to stay current with their payments.”  
Bank card delinquencies edged up 1 basis point to 2.48 percent of all accounts in the second quarter.  They remain significantly below their 15-year average of 3.70 percent.
“Card-related delinquencies have remained remarkably low even as purchase volumes increase,” Chessen said.  “Consumers have learned the lessons of the past and have taken a highly disciplined approach that allows them to consistently pay off or pay down debt.”
Chessen anticipates little fluctuation in delinquency levels as the economy continues its climb and consumers remain financially disciplined. 
“With a steadily improving economy and wages on the rise, consumers’ ability to meet their financial obligations will only get stronger,” said Chessen. “We expect this trend of near-historically low delinquency levels to continue over the next several quarters.” (See Economic Charts.)  
The second quarter 2016 composite ratio is made up of the following eight closed-end loans.  All figures are seasonally adjusted based upon the number of accounts.
  • Home equity loan delinquencies fell from 2.74 percent to 2.70 percent.
  • Mobile home delinquencies fell from 3.41 percent to 3.17 percent.
  • Personal loan delinquencies fell from 1.44 to 1.43 percent.
  • Direct auto loan delinquencies rose from 0.81 percent to 0.82 percent.
  • Indirect auto loan delinquencies rose from 1.45 percent to 1.56 percent.
  • Marine loan delinquencies rose from 1.03 percent to 1.23 percent.
  • Property improvement loan delinquencies rose from 0.89 percent to 0.91 percent.
  • RV loan delinquencies rose from 0.92 percent to 0.96 percent.
             In addition, ABA tracks three open-end loan categories:
  • Bank card delinquencies rose from 2.47 percent to 2.48 percent.
  • Home equity lines of credit delinquencies rose from 1.15 percent to 1.21 percent.
  • Non-card revolving loan delinquencies rose from 1.57 percent to 1.65 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.
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 $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.