Consumer delinquencies continued to move higher during the second quarter, with nine of 11 loan categories showing slightly higher delinquencies amid weak job creation and a slowing economy, according to the American Bankers Association's (ABA) Consumer Credit Delinquency Bulletin.
For the categories relating to housing loans, the ABA found closed-end home equity loan delinquencies rose from 4.12% to 4.38% and open-end home equity lines of credit delinquencies rose from 1.8% to 1.91%. Closed-end property improvement loan delinquencies rose from 1.02% to 1.07%.
However, closed-end mobile home loan delinquencies fell from 3.74% to 3.62%.
‘There will be continued challenges for housing, which has been a persistent drag on economic growth,’ says James Chessen, ABA chief economist. ‘Real estate prices continue to fall, and home loans face increased pressure as unemployment continues to take its toll on borrowers.’Â
Looking towards the third quarter, Chessen says delinquencies will stay near current levels.Â
‘It's hard to envision significant improvements in delinquency rates this year given the sluggish economy and falling consumer sentiment,’ he says.