Consumer Delinquencies Rise in Third Quarter

Delinquencies in closed-end loans rose during the third quarter of 2016, according to the American Bankers Association Consumer Credit Delinquency Bulletin released today. The report noted that delinquencies rose in five of the 11 individual loan categories and that delinquencies remain near historical lows. The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose by six basis points to 1.41 percent of all accounts — the same as the third quarter of 2015 and well below the 15-year average of 2.2 percent.

Bank card delinquencies rose the most, growing 26 basis points to 2.74 percent, yet also remaining nearly 100 basis points below their 15-year average as well. Delinquencies on property improvement loans rose three basis points to 0.94 percent, while delinquencies in the other two home-related categories — home equity lines of credit and home equity loans — fell to 1.16 percent and 2.59 percent, respectively.

“Delinquency rates have held near historical lows for an unusually long period due in large part to consumers’ skillful financial management, but it was inevitable that they would edge up eventually as part of the natural credit cycle,” said ABA Chief Economist James Chessen. “It’s important for consumers to remain cautious and maintain their discipline in keeping debt at levels they can comfortably manage.”