WASHINGTON — Consumer loan delinquencies fell in eight of 11 loan categories in the fourth quarter of 2009, marking the second quarter in a row of broad-based improvement, according to the American Bankers Association's Consumer Credit Delinquency Bulletin.

The composite ratio, which tracks eight closed-end installment loan categories, fell four basis points to 3.19 percent of all accounts compared from 3.23 percent of all accounts in the previous quarter. Bank card delinquencies fell 38 basis points to 4.39 percent of all accounts which is below the five-year average (4.52 percent). The ABA report defines a delinquency as a late payment that is 30 days or more overdue.

ABA Chief Economist James Chessen said the news is a strong indication that the economy is on an upswing. "The fall in consumer delinquencies is a very positive and hopeful sign. Clearly, consumers are shoring up their finances and banks are putting losses behind them. Overall, there is a prudent approach to credit," he said.

In the auto loan categories, direct loan delinquencies fell 10 basis points to 1.94 percent of all accounts.  Indirect auto loan delinquencies (arranged through auto dealers) remained even at 3.15 percent of all accounts.

Housing-related loans showed mixed results. Home equity loan delinquencies hit another record, rising to 4.32 percent of all accounts compared to 4.30 percent in the previous quarter. By contrast, home equity lines of credit delinquencies at quarter-end fell for the first time in six quarters to 2.04 percent of all accounts compared to 2.12 percent in the previous quarter.  

"This first sign of improvement has been a long time coming and is finally some positive indication that the housing market is stabilizing," Chessen said. 

Chessen said that while most consumers appear to be handling their finances well, the level of consumer credit delinquencies is still heavily tied to job creation. "People are actively reducing their level of debt relative to their income and are rebuilding their savings," he said. "But it's still a very stressful time for many families and this won't disappear until more people have jobs. This will keep delinquencies elevated for the next several quarters."


The fourth quarter composite ratio is made up of the following eight closed-end loans. All figures are seasonally adjusted based upon the number of accounts.

Decreased Delinquencies:

• Direct auto loan delinquencies fell from 2.04 percent to 1.94 percent.

• Marine loan delinquencies fell from 2.21 percent to 1.63 percent.

• Mobile home loan delinquencies fell from 3.63 percent to 3.41 percent.

• Personal loan delinquencies fell from 3.74 percent to 3.63 percent.

• Property improvement loan delinquencies fell from 1.66 percent to 1.63 percent.

• RV loan delinquencies fell from 1.64 percent to 1.44 percent.

Unchanged Delinquencies:

• Indirect auto loan delinquencies remained at 3.15 percent.

Increased Delinquencies:

• Home equity loan delinquencies rose from 4.30 percent to 4.32 percent.


In addition, ABA tracks three open-end loan categories:

Decreased Delinquencies:

• Home equity lines of credit delinquencies fell from 2.12 percent to 2.04 percent.

• Bank card delinquencies fell from 4.77 percent to 4.39 percent.

Increased Delinquencies:

• Non-card revolving loan delinquencies increased from 1.40 percent to 1.46 percent.