Delinquency Rate on All Loans Hits High in Q1; Credit Cards Improve

Consumers fell behind on home-related loan payments at a higher rate in the first quarter of 2007, but made more on-time payments on credit cards in the same time period, according to a report released today by the American Bankers Association.

In its quarterly survey report on consumer credit delinquencies, the ABA said that late payments on all home loan categories increased from January to March of this year, when compared to the fourth quarter of 2006.  Delinquencies on home-equity loans rose from 1.92 percent in 2006’s fourth quarter to 2.15 percent in the first quarter of this year. Delinquencies on property-improvement loans rose to 1.61 percent from 1.29 percent. In addition, 2.94 percent of loans for mobile homes were delinquent in the first quarter compared to 2.82 percent in the last three months of 2006.

The ABA considers an account delinquent if payments are 30 or more days past due. The report is based on a survey of more than 300 U.S. banks.

The ABA’s composite delinquency index, a measure of delinquencies across eight tracked loan categories, was the highest since the second quarter of 2001, right in the middle of the early 2000s mini-recession. Delinquencies of all types of consumer loans rose to 2.42 percent in the first quarter from 2.23 percent in the fourth quarter of last year.

The top class of loans that saw improvement in the first quarter was credit cards with delinquencies falling from 4.56 percent in the fourth quarter to 4.41 percent in the first quarter of this year.

Jim Chessen, the ABA’s chief economist, said in a statement, “There are still signs of consumer financial distress, which will continue throughout most of this year as the worst of the housing problem works its way through the economy. The improvement in credit card late payments is somewhat remarkable, given that the economy was not operating on all cylinders.”

In other loan categories, late payments on direct auto loans fell to 1.68 percent from 1.85 percent – the only other loan class to see improvement, while indirect auto-loan delinquencies rose from 2.57 percent to 2.73 percent in the first quarter. Delinquencies on personal loans also rose in the quarter.