Smart Borrower Blog

U.S. Consumers Credit Delinquencies Fell in 2nd Quarter

Oct 21st, 2015 @ 11:34 AM by Amber Nelson

Building on a three-year trend, consumers did even better at managing their credit during the 2015 second quarter, according the American Bankers Association.

The ABA composite ratio, a measure of delinquencies (payments late by 30 or more days) in eight closed-end installment loan categories, declined to 1.36 percent, down 17 basis points from 1.53 percent in the first quarter. Since the middle of 2012, the ratio has stayed below the 15-year average rate of 2.27 percent.

“The steady forward march of the economy has continued to strengthen consumers’ financial positions,” said ABA chief economist James Chessen. “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.”

Among the eight closed-end credit categories, only three saw a slight increase in delinquencies. Direct auto loans delinquencies inched up to an average of 0.72 percent during the second quarter, from 0.71 percent in the first. Mobile home loan delinquencies rose to 3.55 percent from 3.52 percent and property improvement loans delinquencies also just barely moved up to 0.91 percent from 0.90 percent.

Delinquency rates improved in all of the following categories: personal loans, indirect auto loans, RV loans, marine loans and home equity loans. Home equity loans, especially saw a dramatic improvement with the rate falling to 2.90 percent, down 22 basis points from 3.12 percent in the previous quarter.

“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.”

The ABA also tracks three open-ended loan categories, including bank credit cards. While bank card delinquencies did rise slightly in the latest quarter to 2.52 percent from 2.49 percent, they remain well below their 15-year historical average of 3.74 percent and have been consistently low for the past three years.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to and

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