Myung J. Chun / Los Angeles Times (lc3g5onc/600/600x400 )
Missed payments on consumer loans continue to fall and are now well below the average for the last 15 years, the American Bankers Assn. says, reflecting the improved economy, cautious consumer behavior and tight lending standards.
Delinquencies on bank cards in the fourth quarter of 2012 were at the lowest level since 1994, the trade group says in its latest quarterly report, to be released Tuesday.
The study shows fewer missed payments in all three housing-related loan categories -- property improvement, home equity and home equity lines of credit. It was the first time delinquencies declined simultaneously in those categories since the fourth quarter of 2011.
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The bankers’ association tracks eight types of closed-end loans, which are installment loans for a fixed amount with a regular repayment schedule. The category includes loans for cars, boats and recreational vehicles as well as personal and home-improvement loans.
The group also keeps an eye on open-end loans, which have fixed amounts of available credit but balances that fluctuate, such as lines of credit and bank cards.
Loans are classified as delinquent after a single missed payment. A composite delinquency ratio, tracking the eight installment loan categories, fell from 2.16% of the loans in the third quarter to 1.99% in the fourth quarter. (The 15-year average is 2.39%.)
Americans scalded in the financial meltdown are concentrating on bringing down debt levels to help build a secure financial base, James Chessen, the trade group’s chief economist, said in an interview Monday.
Banks, meantime, are still keeping loan standards stringent and writing off many loans as uncollectible, which get the duds off the books and out of the survey. The approach may slow economic growth in the short term, Chessen said, but portends stronger and more consistent growth in the future.
“Consumers learned some pretty hard lessons,” he said. “I think there’s more of a focus on safety.”
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