Consumers are getting a little worst at meeting their loan obligations, but delinquency rates are still near historic lows, according to data compiled by the American Bankers Association that accounts both for open-end and closed-end loans.
Among the loan categories seeing upticks in delinquencies were home equity loans, for which delinquencies rose from 3.72% to 3.86% during the quarter. Property improvement loan delinquencies also rose from 0.74% to 0.80%.
Delinquencies among consumers were expected to level off, said ABA’s chief economist, and must be considered in light of the historic low rates of delinquency that have been charted in recent quarters and years.
“A leveling off in delinquency rates was inevitable after a four-year downward trend that saw consumers reduce debt and dramatically improve their personal balance sheets,” Chessen said. “The good news is that delinquency rates remain near historical lows and are unlikely to spike in the near future.”
Other factors such as paying down debt, flat incomes and a low job growth rate are also weighing against consumers, he said.
“Consumers may find it difficult to further improve their financial positions after years of working to pay down debt,” Chessen said. “Stagnant incomes and a weak job market aren’t going to help change that trend.”
Written by Elizabeth Ecker