U.S. Personal Loan Delinquency Rates Near Eight-Year Low

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.