Consumer loan delinquencies fell in seven loan categories, marking the first time since 2007 that so many loan categories experienced declines, according to the American Bankers Association’s Consumer Credit Delinquency Bulletin.
RV loans remained the top-performing among the seven categories, with the delinquency rate falling from 1.72% to 1.64%.
The composite ratio, which tracks eight closed-end installment loan categories, fell 12 basis points to 3.23% of all accounts compared to 3.35% of all accounts in the previous quarter. Bank card delinquencies fell 24 basis points to 4.77% of all accounts. 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 was positive, but the weak economy and job losses continue to weigh on consumers.
“Delinquencies may be near their peak as job losses have slowed. Consumers are working hard to get their financial houses in order by spending less, saving more, and paying down debt. But there’s still a bumpy road ahead with many people unemployed and family budgets stretched to their limits,” Chessen said.
Chessen also attributed the lower delinquency rates to banks writing off bad loans.
“Banks are putting losses behind them, setting the stage for expanded lending to consumers as the economy recovers,” he said.
Auto loans showed continued improvement. Direct auto loan delinquencies fell nearly half a point to 2.04% of all accounts and indirect auto loan delinquencies (arranged through auto dealers) dropped to 3.15% of all accounts compared to 3.26% of all accounts in the previous quarter.
“It’s always a good sign when delinquencies decline, but they’re still relatively high,” Chessen said. “Until the economy generates more jobs and the housing sector stabilizes, they’re likely to stay that way.”
Housing-related loans continued to show stress. Home equity loan delinquencies hit another record, jumping 29 basis points to 4.3% of all accounts. Home equity lines of credit delinquencies also hit a new record, rising 20 basis points to 2.12% of all accounts. Mobile home delinquencies increased to 3.63% of all accounts from 3.53% of all accounts in the previous quarter.
The third quarter composite ratio is made up of the following eight closed-end loans. All figures are seasonally adjusted based upon the number of accounts.
- Home equity loan delinquencies rose from 4.01% to 4.3%.
- Mobile home loan delinquencies rose from 3.53% to 3.63 %.
- Direct auto loan delinquencies fell from 2.46% to 2.04%.
- Indirect auto loan delinquencies fell from 3.26% to 3.15%.
- Marine loan delinquencies fell 2.28% to 2.21%.
- Personal loan delinquencies fell from 3.90% to 3.74%.
- Property improvement loan delinquencies fell from 1.79% to 1.66%.
- RV loan delinquencies fell from 1.72% to 1.64%.
The Michigan Credit Union League announced a marketing agreement with Thor Industries Inc., the largest producer of recreational vehicles, to aid credit unions offering secured RV loans through Thor’s captive finance firm, Thor CC Inc., according to Credit Union Times.
Under the marketing pact, CUcorp, the league’s marketing subsidiary, will promote “high-quality consumer RV loans” and “broaden the complement of lending products we provide to credit unions,” according to the league.
“High-quality RV loans can help credit unions diversify their portfolio in a safe and profitable manner and also provides an additional avenue to attain new members,” said David Adams, president/CEO of the league.
The captive, Thor CC, originates secured RV loans and sells those loans to both banks and CUs. Thor has 1,300 dealers nationwide.
In a press statement, the league noted that RV loans have outperformed mortgage and home equity portfolios, and the new agreement will allow CUs “cross sell other products and services to this desirable demographic.”
“CUcorp has been a leading provider of new products and services to the credit union industry for the past 40 years,” said Ed Arienti, president and CEO of Thor CC Inc. “We are very excited about this new partnership and look forward to delivering high-quality RV loans and new members to CUcorp’s credit union network.”
TCC offers credit unions a unique channel to acquire incremental members and cross-sell other products and services to this desirable demographic. Traditionally, RV loans have outperformed mortgage and home equity portfolios.
Credit unions interested in finding out more about this opportunity are encouraged to contact CUcorp Vice President for Marketing and Sales Lisa Robinson at (800) 262-6285 ext. 539 or firstname.lastname@example.org.
CUcorp, a marketing company based in Livonia, Mich., and a wholly-owned subsidiary of the Michigan Credit Union League, provides advertising services through CU Growth Solutions and technology solutions through CU Village. Follow Love My Credit Union on Twitter at www.twitter.com/LoveMyCU.