National loan delinquency declines

Consumers stayed on track with paying off their loans and credit cards during the first three months of the year even with a temporary stall in economic growth, a new survey showed Thursday.

Delinquencies on loans and credit cards declined slightly in the January-March quarter, propelled by a big drop in late payments on home equity borrowing, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin.

{mosads}Late payments fell in five of 11 loan categories and remained flat in two during the January-March quarter, the survey said.

“It’s highly encouraging that consumers continued to improve their financial situations even during a quarter where the economy contracted,” said James Chessen, ABA’s chief economist. 

“This speaks to sustained consumer discipline as Americans continue to use and manage their debt responsibly,” Chessen said.

The composite ratio, which tracks delinquencies in eight loan categories such as auto and personal loans, fell to 1.53 percent from 1.52 percent, well below the 15-year average of 2.28 percent. 

Delinquencies in all three home-related categories dropped, too. 

Late payments on home equity loans fell to 3.12 percent from 3.23 percent; home equity lines of credit dropped to 1.42 percent from 1.48 percent; and property improvement loan delinquencies decreased to .90 percent from .93 percent.

A delinquency is a payment that is 30 days or more overdue.

Amid an improving labor market, consumers stayed on track with their credit cards, with late payments dropping to 2.49 percent from 2.52 percent — much lower than the 15-year average of 3.76 percent.

“Delinquencies for credit cards have remained remarkably stable at historically low rates,” Chessen said. 

He said he expects the levels to hold near record lows as long the economic recovery remains stable and consumers remain diligent about their finances.

“Falling unemployment, steady job gains and higher incomes may have driven delinquencies rates down to about as low as they can go,” Chessen said. “Maintaining these low delinquency levels is possible as long as consumers remain focused on managing their level of debt.”