Late consumer payments hold steady

“Consumers have less money leftover to meet all their expenses, including paying back their loans,” said James Chessen, ABA chief economist, in a news release.

ABA’s quarterly survey of more than 300 banks nationwide shows a slight increase in the percentage of consumer loans 30 days or more past due during the second quarter of 2006.

Late payments in eight types of closed-end installment loans, known as the composite ratio, increased slightly to 1.96 percent from 1.94 percent of accounts on a seasonally adjusted basis in the first quarter of 2006. Late credit card payments also showed a slight increase to 4.41 percent in the second quarter, compared to 4.4 percent (seasonally adjusted) in the first quarter.

Among the findings in the bulletin:

• Personal loan delinquencies edged up to 1.86 percent from 1.81 percent.

• Direct auto loan delinquencies dipped to 1.72 percent from 1.78 percent.

• Indirect auto loan delinquencies increased to 2.14 percent from 2.04 percent

• Recreational vehicle loan delinquencies increased slightly to 0.79 percent from 0.78 percent

• Home equity loan delinquencies fell to 1.89 percent from 1.94 percent.

• Property improvement loan delinquencies increased to 1.48 percent from 1.42 percent.

• Mobile home loan delinquencies increased to 3.61 percent from 3.37 percent.

• Additionally, past-due payments on home equity lines of credit – the lowest delinquency rate category – decreased to 0.52 percent from 0.55 percent.

“The financial squeeze may ease a bit in the third quarter as the (Federal Reserve) has stopped raising rates, and prices at the pump are down more than 17 percent since the end of June,” Chessen said in the release.

He noted that homeowners are feeling the effects of a slowdown in the housing market.

“A dark cloud is forming over the housing market and threatens to dampen expectations of gains from rising home prices,” Chessen said. “Up until now, rising home values have increased wealth, been a source of liquidity for borrowers, and allowed consumers to spend out of savings. It’s a different world now, and consumers will need to be more careful in managing their finances.”

ABA advises consumers to review their finances every year and watch for the warning signs of being overextended on credit.

Those include paying only minimum payments for several months, being constantly out of cash, being late on important payments such as mortgages, borrowing from one lender to pay another and taking longer amounts of time to pay off balances.

For those who are having trouble paying down their debts, the ABA recommends credit counseling and being upfront with lenders when difficulties arise. [[In-content Ad]]