Consumers on top of debt

December 20, 2002

Home equity loans continue to carry lowest delinquency rates


Inman News Features

Fewer people are past due on their credit card bills and major consumer loans tracked in the American Bankers Association's latest consumer credit delinquency bulletin, but total dollars outstanding was up.

ABA reported that home equity lines continue to be the loan category with the lowest delinquencies. Delinquencies in this category, based on the number of accounts, were unchanged at 1.38 percent in the third quarter, while late payments on home equity lines dropped from 0.64 percent in the second quarter to 0.58 percent in the third quarter.

Credit card delinquencies fell to a seasonally adjusted 3.81 percent of accounts in the third quarter from 3.91 percent in the second quarter.

However, based on total dollars outstanding, bank-card delinquencies rose to an unadjusted 4.45 percent in the third quarter from the previous quarter's 4.08 percent. This was unchanged from last year's third quarter bank-card delinquencies of 4.45 percent.

ABA Chief Economist James Chessen believes the improvement in past due accounts stems from the weak state of the economy prompting consumers to protect their own financial health, and. "The lower delinquencies are a sign that consumers are doing a pretty good job managing their finances against the odds," he said.

"Lower interest rates—particularly for mortgages—have been the saving grace for many individuals, allowing them to lower their monthly payments and consolidate debt at attractive rates," said Chessen.

The composite ratio of closed-end installment loans 30 days or more past due also fell, to 2.06 percent of all accounts—the lowest in more than two years—from 2.17 percent in the second quarter. The composite ratio tracks eight closed-end consumer installment loans including auto, home equity and personal loans.

The ABA brings together all categories of banking institutions to represent the interests of this rapidly changing industry. Its members include community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks.

Copyright: Inman News Service


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