Late consumer loan payments climb
WASHINGTON (AP) - January 3, 2008 The American Bankers Association reported Thursday that the
delinquency rate on a composite of consumer loans increased to 2.44
percent in the July-to-September quarter. That was up sharply from
2.27 percent in the previous quarter and was the highest
late-payment rate since the second quarter of 2001, when the
economy was suffering through a recession.
Payments are considered delinquent if they are 30 or more days
past due. The survey is based on information supplied by more than
300 banks nationwide.
Late payments on credit cards, meanwhile, dipped during summer.
The delinquency rate on credit cards dropped to 4.18 percent in
the third quarter, down from 4.39 percent in the second quarter.
The association's quarterly survey of consumer loans painted a
mixed picture of how people are managing their debt. It suggested
that some people feel more squeezed than others.
A severe housing slump and weaker home values have clobbered
some homeowners - making it difficult, or even impossible for some
to pay their monthly mortgages. Foreclosures surged to record highs
and more homeowners fell behind on their payments during the third
quarter of last year, the Mortgage Bankers Association reported
last month.
A drop in home prices left some people stuck with balances on
their home mortgages that eclipsed the worth of their home. Others
got burned when low introductory rates on their mortgages jumped to
much higher rates, which they couldn't afford.
"Consumer loans directly related to the housing market were hit
the hardest," said James Chessen, chief economist at the American
Bankers Association. "We anticipate delinquency rates will
continue to rise on these types of loans in the fourth quarter of
2007, reflecting continued weakness in the housing sector."
Late payments on home equity lines of credit jumped to 0.84
percent in the third quarter. That was up from 0.77 percent in the
second quarter and was the highest since the final quarter of 1997.
The delinquency rate on home-equity loans in the third quarter rose
to 2.28 percent, a two-year high.
Meanwhile, the delinquency rate on "indirect" auto loans -
which are arranged through dealerships - jumped in the third
quarter to 2.86 percent, a 16-year high.