Delinquencies in closed-end loans, such as personal or auto loans, fell across the board in the fourth quarter, as did bank card delinquencies, according to ABA’s Consumer Credit Delinquency Bulletin released today. Delinquencies fell in nine of the 11 individual consumer loan categories tracked by ABA. The composite ratio, which tracks delinquencies in the closed-end installment loan categories, fell four basis points to 1.64 percent of all accounts, remaining well below the 15-year average of 2.14 percent.
Delinquencies in all eight closed-end loan categories fell for the first time since 2012, including direct and indirect auto, home equity, marine, mobile home, personal, property improvement and RV loans. “It’s rare to see delinquencies fall in nearly every category, and the levels continue to be very low by historical standards,” noted ABA Chief Economist James Chessen. “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.”
Among the open-ended loan types tracked by ABA, bank card delinquencies fell 16 basis points to 2.46 percent of all accounts, significantly below the 15-year average of 3.6 percent and marking the lowest quarter-end level in more than three years. Meanwhile, non-card revolving loan delinquencies ticked up from 1.57 percent to 1.62 percent. Delinquencies on home equity lines of credit increased from 1.08 percent to 1.16 percent.
Chessen added that he expects delinquencies to continue hovering at low levels for the foreseeable future. “Tax reform has put more money in Americans’ paychecks, which makes it a little easier for them to meet their obligations each month,” he said. “Consumers have done a remarkable job of managing their finances over the last several years, and we expect that will continue as the growing economy reinforces their financial footing.”