Consumer Delinquencies Fall in Second Quarter

Delinquencies on consumer loans fell significantly in the second quarter, driven by large declines in home loan-related delinquencies, according to the ABA Consumer Credit Delinquency Bulletin that was released today. Delinquencies fell in seven of the 11 loan categories.

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, dropped 17 basis points to 1.36 percent of all accounts — well under the 15-year average of 2.27 percent. Bank card delinquencies rose by three basis points to 2.52 percent of all accounts, also well below their 15-year average of 3.74 percent.

ABA Chief Economist James Chessen remarked that credit card delinquencies have remained “really low by historical standards as consumers maintain their sharp focus on keeping debt at reasonable levels.”

Delinquencies in two of the three home-related categories — home equity loans and home equity lines of credit — trended downward, with home equity loan delinquencies dropping by 22 basis points. “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.”