Americans Going Delinquent on Loans at Record Pace

A soaring unemployment rate is causing more Americans to fall behind on loans of all types in record numbers, according to data released Tuesday by the American Bankers Association.

In the first quarter of 2009, the ABA’s composite ratio of delinquencies across eight loan types reached its highest level since the association began tracking late payments in 1974.

The late payment ratio rose to 3.23 percent of all accounts (seasonally adjusted) compared to 3.22 percent of all accounts in the previous quarter. The delinquent balances on those accounts also rose from 3.16 percent to 3.35 percent of total balances due.

“The number one driver of delinquencies is job loss,” said ABA Chief Economist James Chessen. “When people lose their jobs, they can’t pay their bills. Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround.”

The ABA defines a delinquency as a late payment that is 30 days or more overdue.

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

• Home equity loan delinquencies increased from 3.03 percent to 3.52 percent.
• Property improvement loan delinquencies decreased from 1.75 percent to 1.46 percent. 
• Indirect auto loan delinquencies decreased from 3.53 percent to 3.42 percent. 
• Direct auto loan delinquencies increased from 2.03 percent to 3.01 percent.
• Marine loan delinquencies decreased from 2.35 percent to 2.04 percent. 
• RV loan delinquencies increased from 1.38 percent to 1.52 percent. 
• Mobile home loan delinquencies increased from 2.96 percent to 3.70 percent. 
• Personal loan delinquencies increased from 2.88 percent to 3.47 percent.

Although not included in the composite ratio, the ABA also noted that bank card delinquencies rose 23 basis points to 4.75 percent of all accounts, compared to 4.52 percent in the previous quarter. However, the balances on those delinquent accounts rose dramatically, up 108 basis points to 6.60 percent of the value of all outstanding bank card debt, marking a new record.