Consumer Delinquencies Mixed in Fourth Quarter

Delinquencies in closed-end loans rose in the fourth quarter of 2016 while delinquencies in open-end loans fell, according to the ABA Consumer Credit Delinquency Bulletin released today. The rise in closed-end delinquencies was driven by small increases in auto delinquencies, the report noted. The composite ratio, which tracks delinquencies in the closed-end installment loan categories, rose 10 basis points to 1.51 percent of all accounts but remained well below the 15-year average of 2.19 percent.

Delinquencies in indirect auto loans rose the most, increasing 13 basis points to 1.75 percent, while direct auto lending delinquencies increased by 7 points to 0.94 percent. Both remained well beneath 15-year averages, however.

In the home-related categories tracked, home equity lines of credit delinquencies fell to 1.06 percent, while delinquencies in home equity loans and property improvement loans rose modestly to 2.61 percent and 0.98 percent, respectively. Meanwhile, bank card delinquencies fell 5 basis points to 2.69 percent.

“Across all categories, delinquency levels have remained relatively low due to solid job growth, rising income and consumers’ continued efforts to manage their finances carefully,” noted ABA Chief Economist James Chessen. He added that “job growth across a wide swath of industries — from services to manufacturing to high tech — is the key to maintaining low and stable delinquency rates. Lower taxes and infrastructure spending would add fuel to the economic expansion, pushing wages higher and helping to ease consumers’ financial worries.”

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