Mixed Q1 Data on Property-Related Delinquencies

Jul 06, 2017

The first quarter offered no consistent pattern regarding property-related delinquencies, according to the latest Consumer Credit Delinquency Bulletin published by the American Bankers Association (ABA). Overall, delinquencies rose in seven of the 11 individual consumer loan categories tracked by ABA.

During the first quarter, home equity loan delinquencies fell from 2.61 percent in the previous quarter to 2.59 percent, while property improvement loan delinquencies remained unchanged at 0.98 percent. But mobile home delinquencies rose from 4.07 percent to 4.86 percent while home equity lines of credit delinquencies rose from 1.06 percent to 1.11 percent.

“As home prices have risen, home-related delinquencies have returned to normal levels,” said James Chessen, ABA’s Chief Economist. “Greater equity incentivizes people to remain current on their mortgage loans, and we expect this gradual improvement to continue.”
Chessen predicted modest economic growth this year and next, but did not rule out the possibility of new problems.

“The key to keeping delinquencies low is a strong economy that supports households’ financial obligations through job growth and higher wages,” Chessen said. “It’s inevitable that delinquencies will rise to more normal levels, particularly if economic growth stays persistently below two 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.”

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Phil Hall

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Jul 06, 2017

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