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More consumers delinquent on home equity loans

January 8, 2004

Weak job market 'intensifying financial stress'


Inman News

While consumer loan delinquencies decreased across the board during the third quarter, delinquency rates for home equity loans rose, according to the latest American Bankers Association consumer credit delinquency bulletin.

Home equity loan delinquencies rose to 2.52 percent from 2.48 percent, based on the number of accounts. Mobile home loan delinquencies edged higher to 6 percent from 5.98 percent in the second quarter of 2003.

The third quarter did reflect some improvements in consumer delinquencies, as the composite ratio of closed-end installment loans 30 days or more past due dropped to 2.14 percent of all accounts (seasonally adjusted) from 2.18 percent— the highest it had been since the ratio reached 2.34 percent in the fourth quarter of 2001. The composite ratio tracks eight closed-end consumer installment loans, including personal, auto and home equity.

Past-due payments on home equity lines of credit —the lowest delinquency rate category— decreased to 0.52 percent from 0.63 percent.

ABA chief economist James Chessen predicts that without strong job growth, delinquencies would remain relatively high.

"The job market has been flying against strong headwinds, lengthening the time between jobs and intensifying financial stress," Chessen said. "The strong third quarter GDP may signal a shift of the winds and a more positive outlook for jobs and financial health."

The average length of unemployment surpassed 20 weeks during the third quarter, according to the Bureau of Labor Statistics. Manufacturing jobs lost over the last two years reached 2.5 million.

The ABA brings together all categories of banking institutions to represent the interests of this rapidly changing industry. Its members include community, regional and money center banks and holding companies, as well as savings associations, trust companies and savings banks.

Copyright: Inman News Features



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