ABA: Delinquencies Up in Most Home-Related Consumer Credit

Jan 14, 2020

Consumer credit delinquencies related to homeownership were mostly up during the third quarter, according to the American Bankers Association’s (ABA) Consumer Credit Delinquency Bulletin.

Among closed-end loans, property improvement loan delinquencies fell from 1.29 percent in the second quarter to 1.17 percent. However, home equity loan delinquencies rose from 2.70 percent to 2.86 percent and mobile home delinquencies rose from 3.31 percent to 3.47 percent. Among open-end loans, home equity lines of credit delinquencies rose from 1.06 percent to 1.07 percent.

The ABA reported delinquencies rose in eight of the 11 consumer credit categories tracked for this report. The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose 15 basis points to 2.03 percent of all accounts, although it remained below the pre-recession average of 2.09 percent.

“Home equity loans have become a smaller share of banks’ home-related lending portfolios due to a slow recovery in the real estate market and changes in tax treatment,” said James Chessen, ABA’s chief economist. “The good news is that home values are rising, which boosts home equity and helps mitigate home-related loan delinquencies by incentivizing consumers to meet their obligations.”

Chessen added that the overall economy “remains fundamentally sound,” noting that while consumer savings levels are improving, “it remains critically important to focus on building up a financial buffer against unexpected expenses such as auto repair or replacing a major appliance.”

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Phil Hall

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Jan 14, 2020

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