Smart Borrower Blog

4th Quarter Consumer Delinquencies Fell to Record Levels


Apr 11th, 2018 @ 7:44 PM by Amber Nelson


Delinquency rates across a broad-range of loan categories decreased in the 2017 fourth quarter, according to the American Bankers Association, a sign that the growing economy is helping consumers stay on top of their debt.

The ABA’s Consumer Credit Delinquency Bulletin showed that delinquencies – loans that are more than 30 days past due – in 9 out of the 11 tracked categories declined at the end of 2017. And all 8 of the closed-end installment loan groups saw a decrease during the fourth quarter, a first in over 5 years. The average delinquency rate for all 8 categories dropped to 1.64% of all accounts from 1.68% the quarter before and is significantly below the 15-year average of 2.14%.

“It’s rare to see delinquencies fall in nearly every category, and the levels continue to be very low by historical standards,” said James Chessen, ABA’s chief economist. “The steady creation of new jobs has been essential to keeping delinquencies low, and we’ve seen more than 10 million jobs filled in the past four years. Greater job stability and increased take home pay have allowed consumers to make more purchases while keeping balances low relative to their income.”

Bank credit cards showed a dramatic decrease in late payments. Delinquencies on those bank cards fell to 2.46%, down 16 basis points from the previous quarter. It is now well less than a point lower than the 15-year average of 3.60%. Its also the lowest delinquency rate since 2014.

Late payment rates also dropped on both indirect and direct auto loans. Indirect car loans – those arranged by car dealers or brokers – had a delinquency rate that declined to 1.78% of all accounts, down from 1.84%. Direct car loans– those made through banks – saw their delinquency rate slip to 1.07%, down from 1.12%.

Delinquency rates also fell on home equity loans, marine loans, mobile home mortgages, personal loans, property improvement loans and RV loans.

The only categories that saw an increase in late payments were home equity lines of credit, climbing 8 basis points to 1.16% and non-credit card revolving loans, which rose 5 basis points to 1.62%.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

Leave a Reply