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Economy in Brief

U.S. Personal Loan Delinquency Rates Near Eight-Year Low
by Tom Moeller  July 11, 2014

The American Bankers Association indicated that loan delinquency rates showed varied improvement during the first quarter. Delinquency rates, as a percentage of loans with outstanding payments, mostly fell despite the overall economy's negative 2.9% rate of growth. The improvement surely reflects real disposable income growth of 1.5% (2.3% y/y), nonfarm payrolls growth of 1.5% (1.7% y/y) and the reduced unemployment rate of 6.7%.

Leading the improvement was a decline in delinquency rates on closed-end loans. For personal loans, the rate fell to 1.39%. That was nearly an eight year low and down from the 4.02% high at the end of the last recession. Also moving to a record low was the delinquency rate on auto loans made directly from the bank. The 0.54% rate compared to 2.59% at the 2009 peak. For auto loans made through the dealership, the rate held at a ten-year low of 1.10% and compared to the recession peak of 3.04%. Elsewhere in the spectrum, performance was varied. For home improvement loans, the past due rate of 1.03% was up from the year-ago level of 0.72% yet below the recession peak of 2.56%. Home equity loans were 3.81% past due, a rate that's up from a year-ago but down from the 5.48% high. Education loans are where the repayment problem lies. The 8.69% rate was up from the 4.54% low in 2005 and wasn't far from the 2000 record of 9.56%.

Open-end loans also have shown varied rates of improvement. Credit card delinquency rates have fallen to 3.38%, the lowest level since 2005. Past-due rates on non-card revolving credit fell to a record low rate of 1.80%. For home-equity lines of credit, however, the 2.63% past due rate is still near the 2010 rate and down just slightly from the 3.15% high reached in 2009.

The American Bankers Association data can be found in Haver's DLINQ database.

Consumer Credit Delinquency Rates (American Bankers Assn.) Mar Feb Jan Mar'13 2013 2012 2011
Closed-end Loans for a Specific Amount
   Personal Loans 1.39% 1.63% 1.64% 1.76% 1.64% 1.88% 2.64%
   Auto Loans (Bank) 0.54 0.55 0.57 0.87 0.73 0.96 0.79
   Auto Loans (Dealer) 1.10 1.08 1.06 1.16 1.10 1.25 1.69
   Property Improvement Loans 1.03 0.97 0.94 0.72 1.11 1.18 1.16
   Home Equity & Second Mortgage Loans 3.81 3.80 3.74 3.71 3.73 3.92 4.41
   Education Loans (in Repayment) 8.69 8.67 8.63 8.36 8.89 8.30 8.18
Open-end Loans
   Home Equity Lines of Credit 2.63 2.59 2.56 2.97 2.67 2.84 2.78
   Bank-card Credit 3.38 3.47 3.53 3.80 3.60 3.87 4.82
   Non-card Revolving Credit 1.80 1.81 1.87 2.04 1.93 1.96 2.40
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