Property-related delinquencies show mixed data in the first quarter of this year, according to the American Bankers’ Association. In addition, open-end and closed-end loan delinquencies were on the rise as well. The uptick on the close-ended delinquencies is caused by auto loan section, as reported by the ABA Consumer Credit Delinquency Bulletin.
For closed-end home related-delinquencies, falling to 2.59 percent from the previous quarter’s 2.61 percent is the home equity loan delinquencies. Remained unchanged are the property improvement loan delinquencies. It has remained at 0.98 percent in the first quarter of this year. Mobile home delinquencies, however, rose to 4.86 percent from 4.07 percent. For open-end loan home related-delinquencies, home equity lines of credit also ticked up to 1.11 percent from 1.06 quarter-over-quarter.
ABA Chief Economist James Chessen said, “As home prices have risen, home-related delinquencies have returned to normal levels.” “Greater equity incentivizes people to remain current on their mortgage loans, and we expect this gradual improvement to continue,” he added.
Delinquencies in Other Consumer Loan Categories Remain Below 15-Year Averages
According to this report, delinquencies rose in 7 out of the 11 consumer loan categories that the ABA tracks. Indirect auto loan delinquencies rose to 1.83 percent, that accounts to 8 basis points higher than the previous quarter. Delinquencies for direct auto loans were also on the rise, at 1.03 percent of all accounts in the first quarter. Both indirect and direct auto loan delinquencies are very well below their 15-year averages.
For bank credit card delinquencies, a 5 basis-point rise was also seen. It fell 5 points in the last quarter of 2016, it is now at 2.74 percent in the first quarter of 2017. Despite the rise, bank card delinquencies remain below its 15-year average of 3.65 percent
Chessen said, “The key to keeping delinquencies low is a strong economy that supports households’ financial obligations through job growth and higher wages. It’s inevitable that delinquencies will rise to more normal levels, particularly if economic growth stays persistently below 2 percent. As the economic cycle eventually comes full circle, it’s important for consumers to maintain a smart and disciplined approach to credit, especially millennials who may be navigating a downturn for the first time in their professional lives.”