Consumer delinquencies continued to decline in the second quarter, with bank card delinquencies falling to 11-year lows, according to new data from the American Bankers Association (ABA). However, delinquencies on home-related loans rose during the second quarter.
‘Consumers are saving more and borrowing less as they work to pay down debt at a faster rate,’ says James Chessen, chief economist at the ABA. ‘Economic uncertainty has made consumers hesitant to take on new debt, and building a stronger financial base has become a priority.’
The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 11 basis points to 2.24% of all accounts in the second quarter, below the 15-year average of 2.4%.
However, Chessen acknowledged that delinquencies in all three categories of home-related loans rose in the second quarter: property improvement loan delinquencies rose from 0.83% to 0.9%, home equity loan delinquencies rose from 4% to 4.09% and home equity lines of credit delinquencies rose from 1.78% to 1.91%.
‘While the housing market appears to have turned a corner, we are many quarters away from seeing improvement filter through to reduce home-related delinquencies,’ Chessen says.