U.S. Loan Delinquencies Rise for First Time in a Year, ABA Says

U.S. consumer-loan delinquencies increased for the first time in a year during the second quarter amid a slowdown in recovery from the worst economic crisis since the Great Depression, the American Bankers Association said.
Overall delinquencies across eight loan categories rose to 3 percent of all accounts in the second quarter from 2.98 percent in the preceding three-month period, the ABA said in its quarterly Consumer Credit Delinquency Bulletin. Most of the increase was attributable to delinquencies on mobile homes and marine loans, according to the report.
The overall increase came even as credit-card delinquencies dropped to their lowest level since 2001, the Washington-based ABA said.
“The economic momentum over the last few quarters seems to be losing steam,” ABA Chief Economist James Chessen said in a statement. “I think delinquencies will continue to improve but at a slower pace, reflecting a struggling economy.”
U.S. economic growth slowed in the second quarter and the Conference Board reported that confidence among consumers retreated to a five-month low amid concern that a lack of jobs will impede recovery from the 2008 credit crisis. September unemployment will climb to 9.7 percent from 9.6 percent in August, according to the median estimate of 62 economists surveyed by Bloomberg News ahead of an Oct. 8 report from the Labor Department.
Past-due credit card payments fell to 3.62 percent, from 3.88 percent in the first quarter of 2010 as consumers focused on reducing debt and building savings, Chessen said.
Unemployment is restraining consumer spending, the biggest part of the economy, increasing pressure on the Federal Reserve to do more to bolster the recovery. Economists surveyed by Bloomberg project unemployment will average at least 9 percent through 2011.
The ABA’s quarterly report uses data from banks on loans 30 days or more past due and covers eight categories, including auto loans, credit cards and home-equity loans.
To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net.