The composite ratio, which tracks delinquencies in eight closed-end loan categories, rose 12 basis points to 1.68 percent in the third quarter. However, it remains below the 15-year average of 2.15 percent.
“Delinquencies remained remarkably low for this late in the economic cycle,” James Chessen, ABA’s chief economist, said. “The very modest increase in closed end loan delinquencies reflects a slow movement back toward more normal levels. Jobs remain plentiful and incomes continue to rise, which has helped boost consumer confidence. The bottom line is that consumers are feeling comfortable with their finances and have a proven record of successfully meeting their financial obligations over the last several years.”
ABA also reports that delinquencies credit cards fell in the third quarter. Further, delinquencies fell in five and rose in five of the 11 individual consumer categories, with one category remaining the same. Specifically, delinquencies in bank cards fell five basis points to 2.62 percent.
“Consumers continue to take a disciplined approach to managing their credit cards, which has kept delinquencies in this category near historical lows for more than five years,” Chessen said.
In the home loan category, home equity loan delinquencies fell eight basis points to 2.42 percent, while home equity line of credit delinquencies edged up one basis point to 1.08 percent. In addition, property improvement loan delinquencies rose 13 basis points to 1.08 percent.
“Home-related delinquencies continue to show overall improvement as the housing market gains strength,” said Chessen. “With higher property values and greater home equity, people are well-positioned and motivated to ensure their loan payments remain current.”
Delinquencies in indirect auto loans — those arranged through a third party such as an auto dealer — were unchanged at 1.84 percent. Delinquencies in direct auto loans — those arranged directly through a bank — rose eight basis points to 1.12 percent.
Chessen is optimistic that delinquency rates will be stable in 2018.
“We expect tax reform will improve the economy by creating more job opportunities and augmenting wage growth,” Chessen said. “That extra boost, combined with consumers’ continued financial discipline, should help keep delinquencies low in the near future.”