National group says consumer delinquencies increase

The composite ratio, which tracks eight closed-end installment loan categories, rose 21 basis points to 2.65 percent of all accounts in the fourth quarter on a seasonally adjusted basis.

The ABA defines delinquency as payments that are at least 30 days overdue, and the group’s chief economist said in a news release that auto loan delinquencies were a primary contributor to the index’s rise.

The index also found that the number of delinquent bank card accounts rose 20 basis points to 4.38 percent, but those delinquencies remain close to the five-year average of 4.4 percent.

“The rise in consumer credit delinquencies is consistent with a rapidly slowing economy,” said ABA Chief Economist James B. Chessen, in the release.

“Stress in the housing market still dominates the story, but it’s a broader tale of an overall weak economy,” Chessen added.

According to the index:

• Home equity loan delinquencies increased to 2.39 percent from 2.28 percent.

• Property improvement loan delinquencies increased to 1.81 percent from 1.6 percent.

• Indirect auto loan delinquencies increased to 3.13 percent from 2.86 percent.

• Direct auto loan delinquencies increased to 1.9 percent from 1.81 percent.

• Personal loan delinquencies increased to 2.48 percent from 2.29 percent.

Chessen predicted that delinquencies will continue to rise during the first half of 2008.

“No relief for consumers is in sight as food and gas prices remain stubbornly high and income growth is anemic,” Chessen said.

ABA recommends that borrowers who are experiencing financial stress contact their lenders early to discuss available payment options.[[In-content Ad]]