Consumer loan delinquency hits record high in 1Q

The number of people delinquent on loans rose to a record high in the first quarter, according to new data from the American Bankers Association.
The composite delinquency rate among eight types of closed-end installment loan categories increased to 3.23 percent of all accounts, from 3.22 percent in the previous quarter, the association said. Delinquency is defined as a payment that’s at least 30 days overdue.
The industry group blames the record wave of job losses as a major factor. More than 2 million Americans lost their jobs in the first three months of the year, and 6 million have lost their jobs since the recession began.
“Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround,” James Chessen, chief economist for the association, said in a release.
Bank card delinquencies rose to 4.75 percent of all accounts, from 4.52 percent in the previous quarter. But balances on those delinquent accounts rose to 6.6 percent of the value of all outstanding bank card debt — marking a record high — from 5.52 percent.
Chessen said the unemployed may be using bank cards to bridge a temporary income gap, especially with less home equity to fall back on as housing values continue to decrease.
Other delinquency rates on the rise in the first quarter:
• Home equity loan delinquencies increased to 3.52 percent of all loans from 3.03 percent.
• RV loan delinquencies rose to 1.52 percent from 1.38 percent.
• Mobile home loan delinquencies increased to 3.7 percent from 2.96 percent.
• Personal loan delinquencies grew to 3.47 percent from 2.88 percent.
• Direct auto loan delinquencies increased to 3.01 percent from 2.03 percent.
Loan delinquency rates in some categories posted a decrease over the quarter, the association said. Declines in delinquency rates were registered with property improvement loans, indirect auto loans and loans for boats and yachts.


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