The delinquency rate for home equity loans (30 days or more past due) was about 2.70% in the second quarter – a decrease of four basis points from 2.74% in the first quarter, according to the American Bankers Association’s (ABA) Consumer Credit Delinquency Bulletin.
Delinquencies on home equity lines of credit, however, increased six basis points to 1.21% of all accounts, while delinquencies on property improvement loans increased two basis points to 0.91% of all accounts.
The report covers delinquencies in 11 individual loan categories.
“Consumers have become more confident over the past two years, and for good reason – their financial picture is improving and their paychecks have finally started to rise as we near full-employment levels,” said James Chessen, chief economist for the ABA, in a statement. “Quarter after quarter, consumers continue to build a stronger balance sheet as they earn more, save more and keep debt levels low relative to income.
“Small ups and downs are expected, but improvement is still very much in the cards for home-related delinquencies,” Chessen added. “Rising home prices have restored equity, providing even more incentive for borrowers to stay current with their payments.”
Bank card delinquencies edged up one basis point to 2.48% of all accounts in the second quarter but remained significantly below their 15-year average of 3.70%.
“Card-related delinquencies have remained remarkably low, even as purchase volumes increase,” Chessen said. “Consumers have learned the lessons of the past and have taken a highly disciplined approach that allows them to consistently pay off or pay down debt.”
Chessen anticipates little fluctuation in delinquency levels as the economy continues its climb and consumers remain financially disciplined.
“With a steadily improving economy and wages on the rise, consumers’ ability to meet their financial obligations will only get stronger,” said Chessen. “We expect this trend of near-historically low delinquency levels to continue over the next several quarters.”