Consumer Loan Delinquencies Fell in Third Quarter, ABA Says

U.S. consumer-loan delinquencies (DELQUS30) fell in the third quarter for the first time in 2011 as consumers benefited from improving job and housing markets, the American Bankers Association said.

Overall delinquencies in eight loan categories decreased to 2.59 percent of all accounts in the three months ended Sept. 30 from 2.88 percent in the preceding quarter, the ABA said today in its Consumer Credit Delinquency Bulletin.

The survey, which defines delinquency as a late payment that is 30 days or more overdue, found that home-equity loan delinquencies fell to 4.12 percent in the third quarter, from 4.38 percent three months earlier as the housing market moved closer to stabilization, James Chessen, the ABA’s chief economist, said in a statement.

“Subtle improvements in the economy such as lower gas prices and a better job market have reduced some of the stresses facing consumers,” Chessen said.

In two categories -- credit cards and home equity lines of credit -- delinquencies increased slightly in the third quarter. Credit card late payments ticked up to 3.25 percent of all accounts, from 3.22 percent, and home-equity credit line delinquencies increased to 1.93 percent of all accounts, from 1.91 percent in the second quarter.

“Improvement in delinquencies over the next year hinges on the housing market, which still poses an enormous challenge to continued economic growth,” Chessen said. “Job creation and income growth are also a must if we hope to see delinquencies continue to fall.”

The U.S. unemployment rate increased to 8.7 percent in December from 8.6 percent the prior month, the lowest since March 2009, according to the median forecast of 62 economists in a Bloomberg News survey before the Labor Department data is released on Jan. 6.

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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