Magazine article American Banker

Consumer Loan Problems Spread in the First Quarter

Magazine article American Banker

Consumer Loan Problems Spread in the First Quarter

Article excerpt

Consumer Loan Problems Spread in the First Quarter

The recession cut a broad swath in consumer loan portfolios during the first quarter, pushing up delinquencies on virtually all types of debt.

Among seven types of closed-end credits made by commercial banks, 2.67% were at least 30 days past due as of March 31, up from 2.57% three months earlier, the American Bankers Association said Friday. Only once in the past seven years has the level been higher, in the third quarter of 1989.

Last year the recession started driving up delinquencies on bank card loans - which tend to reflect the economic pressures on consumers most quickly - and mortgages.

Significant Upswing

But in the first quarter, delinquencies rose significantly in other areas, most notably in home-equity lines of credit. Delinquencies climbed to 0.98% of those accounts, from 0.85% at yearend.

The ABA composite figure also includes second mortgage, personal, recreational vehicle, mobile home, and direct and indirect auto loans.

The association attributed the increase, in part, to consumers' need to catch up on debt incurred during the holiday season. This year, the problem was exacerbated by the recession.

In its announcement Friday, the trade group said encouraging economic news suggests that delinquencies will level off in the near future. It cited an increase in consumer borrowings in April - the first reported by the government this year - as one sign that consumer confidence is returning and the recession may soon subside. …

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