The delinquency rate for loans to consumers to buy RVs fell in the fourth quarter of 2009 and represented the best performing of 11 indices tracked by the American Bankers Association (ABA), the ABA’s Credit Delinquency Bulletin reported on Wednesday (April 7).
RV loan delinquencies fell from 1.64% to 1.44%, one of eight categories to show improvement in the quarter.
Consumer loan delinquencies fell in eight of 11 loan categories in the quarter, marking the second quarter in a row of broad-based improvement.
The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
ABA Chief Economist James Chessen said the news is a strong indication that the economy is on an upswing.
“The fall in consumer delinquencies is a very positive and hopeful sign. Clearly, consumers are shoring up their finances and banks are putting losses behind them. Overall, there is a prudent approach to credit,” he said.
By category the results were as follows:
The fourth quarter composite ratio is made up of the following eight closed-end loans. All figures are seasonally adjusted based upon the number of accounts.
- Direct auto loan delinquencies fell from 2.04% to 1.94%.
- Marine loan delinquencies fell from 2.21% to 1.63%.
- Mobile home loan delinquencies fell from 3.63% to 3.41%.
- Personal loan delinquencies fell from 3.74% to 3.63%.
- Property improvement loan delinquencies fell from 1.66% to 1.63%.
- RV loan delinquencies fell from 1.64% to 1.44%.
- Indirect auto loan delinquencies remained at 3.15%.
- Home equity loan delinquencies rose from 4.30% to 4.32%.
In addition, ABA tracks three open-end loan categories:
- Home equity lines of credit delinquencies fell from 2.12% to 2.04%.
- Bank card delinquencies fell from 4.77% to 4.39%.
- Non-card revolving loan delinquencies increased from 1.40% to 1.46%.
For a complete look at the ABA report, click here.
The default rate on RV loans crept up slightly during the first quarter of 2009, from 1.38% to 1.52%, according to an American Bankers Association (ABA) Consumer Credit Delinquency Bulletin.
The slight rise was just enough to nudge the RV loan sector out of the best-performing among eight closed-end loans surveyed by the ABA.
Property improvement loan delinquencies decreased from 1.75% to 1.46% to take over the best-performing spot. It was one of three loan types to show lower delinquency default rates in the quarter.
Meanwhile, a record wave of job losses is being cited as a major factor in a record rate of consumer delinquencies in the quarter, according to the ABA.
More than 2 million Americans lost their jobs in the first three months of the year with more than 6 million jobs lost since the recession began. The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose to 3.23% of all accounts (seasonally adjusted) compared to 3.22% of all accounts in the previous quarter.
The delinquent balances on those accounts also rose from 3.16% to 3.35% of total balances due (not seasonally adjusted). The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
The first quarter composite ratio is made up of the following closed-end loans. All figures are seasonally adjusted based upon the number of accounts:
- Home equity loan delinquencies increased from 3.03% to 3.52%.
- Property improvement loan delinquencies decreased from 1.75% to 1.46%.
- Indirect auto loan delinquencies decreased from 3.53% to 3.42%.
- Direct auto loan delinquencies increased from 2.03% to 3.01%.
- Marine loan delinquencies decreased from 2.35% to 2.04%.
- RV loan delinquencies increased from 1.38% to 1.52%.
- Mobile home loan delinquencies increased from 2.96% to 3.70%.
- Personal loan delinquencies increased from 2.88% to 3.47%.
ABA Chief Economist James Chessen said the figures are a natural consequence of mounting job losses in a weakening economy.
“The number one driver of delinquencies is job loss,” Chessen said. “When people lose their jobs, they can’t pay their bills. Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround,” Chessen said, adding that job growth is not likely to improve in the foreseeable future. “However, many people are taking greater control of their finances by cutting spending, lowering debt and saving more money.”
Chessen said the unemployed may be using bank cards to bridge a temporary income gap, especially with less home equity to fall back on as housing prices continue to fall. Bank card delinquencies rose 23 basis points to 4.75% (s.a.) of all accounts, compared to 4.52% in the previous quarter. (The record was 4.81% in the second quarter of 2005.) However, the balances on those delinquent accounts rose dramatically, up 108 basis points to 6.60% (n.s.a.) of the value of all outstanding bank card debt, marking a new record.
Reflecting continued weakness in the housing sector, delinquencies for the home equity category also hit record highs: home equity loan delinquencies rose 49 basis points to 3.52% of accounts, and home equity lines of credit delinquencies rose 43 basis points to 1.89% of accounts.
“Even if home prices stop falling later this year, unemployment will keep home equity delinquencies high for some time,” Chessen said.
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%.