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Economy in Brief

U.S. Loan Delinquencies Up Slightly, But Still Low
by Tom Moeller August 23, 2007

For all the media hype regarding the "subprime" loan issuance problem, the latest data issued by the Federal Reserve Board for 2Q07 indicate only slight increases in delinquent payments on consumer, real estate and commercial & industrial loans at commercial banks.

Even if delinquencies rise further this quarter (which they probably will), the levels are still quite low absolutely and relative to historical comparison, i.e., relative to the late 1980s and the early 1990s.

For all loans and leases, the delinquency rate increased to 1.86% during the second quarter from 1.72% during 1Q07. That level is up versus 1.57% during the prior two years but, still, it is only a third of the delinquency rate during the last two recessions.

The rise in delinquent payments on residential real estate loans indeed is more dramatic to 2.28% from 2.07% in 1Q07. It is equal to where it was during the last recession. Yet these figures are below the high seen in 1991 of 3.32%. Again, these comments await the update for this quarter.

For consumer loans, the delinquency rate rose to 3.02% from 2.98% during 1Q. That's up from the 2005 low of 2.82%, but down from the highs during the last two recessions. It's lower even than the 3.75% range that prevailed during the late 1990s expansion.

Delinquencies on C&I loans actually fell q/q to 1.17% from 1.18% during 1Q. Delinquent C&I loans last year averaged 1.27% of the total outstanding.

These data series are available in Haver's USECON database.

Subprime Mortgages is recent Congressional testimony delivered by Sandra F. Braunstein of the Federal Reserve Board and it is available here.

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