Consumer Loan Delinquencies Highest Since 1992

Consumer loan delinquencies reached their highest levels since 1992 as the weakening economy continued to takes its toll on the American public, the American Bankers Association said today.

According to the group’s Consumer Credit Delinquency Bulletin released today, the composite ratio, which tracks eight closed-end installment loan categories, climbed 21 basis points to a seasonally adjusted 2.65 percent in the fourth quarter.

All eight categories experienced a rise in delinquencies during the quarter, which are characterized as late payments 30 days or more overdue.

Home equity loan delinquencies increased to 2.39 percent from 2.28 percent, while property improvement loan delinquencies rose to 1.81 percent from 1.60 percent.

The number of delinquent bank card accounts also climbed 20 basis points to 4.38 percent, but still remain near the five-year average of 4.40 percent.

“The rise in consumer credit delinquencies is consistent with a rapidly slowing economy,” said James Chessen, ABA chief economist. “Stress in the housing market still dominates the story but it’s a broader tale of an overall weak economy.”

Chessen noted that delinquencies will likely continue to rise during the first half of the year and suggested that overextended borrowers get in contact with their lenders as soon as possible to negotiate financing options.

“No relief for consumers is in sight as food and gas prices remain stubbornly high and income growth is anemic,” Chessen concluded.

Recently, analysts have expressed concern that a lack of available home equity could cause borrowers to default on auto loans, credit cards, and other consumer loans.