Delinquencies in closed-end loans fell sharply in the fourth quarter of 2015 as home values steadily increased, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin released today. The report noted an uptick in delinquencies for 5 out of 11 individual loan categories.
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, remained at 1.14 percent of all accounts in the fourth quarter — 13 basis points lower than the previous year and well below the 15-year average of 2.24 percent.
Delinquencies in two of the three home-related categories — home equity loans and lines of credit — were down significantly, falling to 2.68 percent and 1.18 percent, respectively. Delinquencies for property improvement loans rose 5 basis points to 0.92 percent.
“A confluence of factors have kept delinquencies very low. The economy’s better, wages have grown and consumers are keeping a watchful eye on their finances,” said ABA Chief Economist James Chessen. “The national savings rate is at one of its healthiest points since the recession and trending upward, which means people are well-positioned to repay their debts. Disciplined saving, along with steady job growth and climbing household wealth, signal that delinquency levels are likely stay near these historic lows for some time.”