Consumer Loan Delinquencies Hit Record

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April 2, 2009 by   2 Comments

More U.S. consumers have fallen behind on loan payments than ever before, and the problem may worsen as millions more find themselves out of a job, a study released today (April 2) shows.

According to the American Bankers Association (ABA), which represents most large U.S. banks and credit card companies, the percentage of consumer loans at least 30 days late rose to a seasonally adjusted 3.22% in the October-to-December period from 2.29% in the prior quarter, according to Reuters.

The ABA said the fourth-quarter rate was the highest since it began tracking the data in 1974, with delinquencies rising in nearly every category. It said these credit trends are unlikely to improve before 2010.

“Job losses have really hurt the economy and will continue to inflict pain for several months,” James Chessen, the ABA’s chief economist, said in an interview. “The greater the losses are, the more severe an impact it has on all credit markets.”

The ABA study covers direct auto, indirect auto, closed-end home equity, home improvement, marine, mobile home, personal and recreational vehicle loans. It excludes bank credit card and education loans.

“We’ve seen delinquency rates across the board in consumer loans go up, and continue to go up,” Bank of America Corp. CEO Kenneth Lewis said today on CNBC television. But he said “early” delinquencies, or payments missed shortly after loans are taken out, have begun to abate in a “smattering” of products at the largest U.S. bank.

According to the ABA, the late-payment rate on auto loans made through dealers rose to a record 3.53% in the fourth quarter from the third quarter’s 3.25%, while late payments on home equity lines of credit rose to a record 1.46% from 1.15%.

RV loan delinquency rates rose from 1.27% to 1.38% but remained the lowest among all the categories measured.

A report issued Wednesday by ADP Employer Services said U.S. private employers shed a record 742,000 jobs in March, pushing year-to-date losses above 2 million.

Economists polled by Reuters expect the Labor Department to say on Friday that the U.S. jobless rate rose to 8.5% in March, a level not seen since 1983, from February’s 8.1%.

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2 Responses to “Consumer Loan Delinquencies Hit Record”

  1. dennis oswalt sales manager all american coach on April 2nd, 2009 5:23 pm

    when the american bankers assoc releases deliquency reports that show our industrey out preforms all others in terms of deliquency and they continue to choke the life blood out of gaad campanies something should be done. when you all but quit making loans on rv products they dont seem to see that good loans on their books also pay out deceasing thier outstanding loans and making their deliquency percentages go even higher. with all the money we are paying these people stock holders should question this logic

  2. denny oswalt sales manager all american coach on April 3rd, 2009 11:05 am

    it is hard for me to understand how the american bankers association can release a deliquency report saying rv loan out produce any kind of loan a bank makes and yet the high paid power that cantrol these banks are putting very good dealers and manufacturs out of business. simple fact tell you that when you tighten the thumb screws down so tight that a good consumer that has paid their bills and has a good credit score can not purchase that this creates two problems one your outstanding loan account goes down but worse existing good paying loans pay out both causing your deliquency percentages to go up. if we as an industry produce the best producing loans the stock holders of these banks should question the decisions of those highly paid people in control