The percentage of U.S. consumers who are late on their loan payments remained at near-record lows in the first quarter, according to a new report by the American Bankers Association.
The delinquency rate on bank-issued credit cards fell to 2.44%, from 2.6% in the fourth quarter, while late payments on a composite index of eight types of closed-end loans rose to 1.63% from 1.59%, the ABA said. After the fluctuations, the two rates were both just a few basis points above their all-time low levels.
ABA Chief Economist James Chessen predicts that rates of late payments will continue to bounce along the bottom for some time, as consumers remain mindful of the damage that high debt levels caused during the Great Recession.
"With an improving economy and continued consumer vigilance, we expect delinquency rates to fluctuate at this lower end of the range for the foreseeable future," Chessen said in a news release.
In the first quarter, delinquency rates were down in six of the 12 consumer loan categories that the ABA tracks. They were up in the other six, when compared with the last three months of 2013.
But the longer-term trend is clearer. When compared with the first quarter of last year, delinquency rates were down in eight of the 12 loan categories. Only indirect auto loans, property improvement loans, bank-issued credit card loans and non-card revolving loans had higher delinquency rates in the first quarter than they did a year earlier.
The ABA considers a loan delinquent if the borrower's payment is 30 days or more overdue. All of the report's delinquency rates are adjusted for seasonal differences.
One key area of improvement over the last year has been home equity lines of credit. The delinquency rate for that product fell to 1.57% in the first quarter, down from 1.91% a year earlier.
Home equity lines of credit have drawn concern from regulators because the monthly payments for many borrowers are scheduled to reset to higher levels in the next few years. Falling delinquency rates may help soften that worry.
"Home equity line delinquencies have fallen back to what they were five years ago," Chessen said.
The ABA's report on delinquency rates followed the release Tuesday of new government data showing that the level of consumer debt outstanding in the United States continues to rise.
In May, revolving consumer debt rose from $827 billion to $835 billion, while non-revolving consumer debt increased from $2.30 trillion to $2.32 trillion, according to data from the Federal Reserve Board.
There are indications that credit card issuers are beginning to make more subprime loans available, which is likely contributing to the rise in revolving credit debt outstanding. There's typically a time lag between a loosening of credit standards and a rise in delinquency rates.
Kevin Wack is a California-based reporter for American Banker who covers the U.S. consumer finance industry.
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