As performance on credit lines secured by residential properties deteriorated, late payments on home-equity installment loans retreated. Overall consumer delinquency set a new record.
Delinquency of at least 30 days on closed-end consumer installment loans was 1.51 percent in the third quarter.
That was the lowest delinquency rate on record for the composite ratio, which reflects performance on eight closed-end installment loan categories.
The American Bankers Association reported the numbers Thursday.
The composite ratio was 1.57 percent in the second quarter and 1.63 percent in the third-quarter 2013.
“Strong economic growth has boosted job creation and supported income growth, which has made it easier for consumers to meet their financial obligations,” ABA Chief Economist James Chessen said in the report. “Lower gas prices helped free up resources for everything from new purchases to debt repayment.”
The 30-day rate on closed-end home-equity loans was 3.24 percent, improving from the previous quarter’s 3.36 percent.
HEL delinquency was 3.58 percent at the same point in 2013.
The past-due rate on home-equity lines of credit worsened, climbing 2 basis points from the second quarter to 1.52 percent.
Still, HELOC delinquency has declined from 1.71 percent in the third-quarter 2013.
“As the housing market continues its slow and steady recovery, home-related delinquencies are following a parallel track,” Chessen explained. “Increased home prices have eased pressure on consumers, but stresses can still occur, particularly as home-equity lines reach the fully amortizing period and payment requirements rise. Banks continue to work with customers to ensure they can meet their obligations.”
Performance on mobile home loans worsened, with the 30-day rate climbing 8 BPS to 3.64 percent. There was no change in this category from the same quarter in 2013.
A quarter-over-quarter decline of 15 BPS was recorded for property improvement loans, leaving the rate of delinquency at 0.82 percent. The rate in this category was 1.25 percent in the third-quarter 2013.
