A key bank industry group released data showing that consumer loan delinquencies may be nearing their peak but said it remained concerned about persistent weakness in the economy and job markets.
The American Bankers Association said on Thursday consumer loan delinquencies dropped in seven categories in the third quarter, including bank card delinquencies, which fell 0.24 percentage point to 4.77 percent of all accounts.
It marked the first time since 2007 that so many loan categories experienced declines in late payments, the ABA said.
The exception was housing-related loans such as home equity loans and mobile home loans, for which delinquencies increased.
"Delinquencies may be near their peak as job losses have slowed," ABA chief economist James Chessen said in a statement. "It's always a good sign when delinquencies decline, but they're still relatively high. Until the economy generates more jobs and the housing sector stabilizes, they're likely to stay that way."
The unemployment rate improved slightly in November to 10 percent from 10.2 percent in October, but third-quarter gross domestic product was revised down to a 2.2 percent annual rate instead of 2.8 percent.
The ABA defines a delinquency as a payment that is 30 days or more overdue.
Chessen said some of the improvements in the delinquency rates could be attributed to banks writing off bad loans.
"Banks are putting losses behind them, setting the stage for expanded lending to consumers as the economy recovers," he said.
President Barack Obama has been pushing banks to lend more, especially to small businesses, to help jump start the economy.
Last month Obama met with a handful of bank chief executives at the White House and told them that they owed it to the country to help lift the economy out of crisis.
Banks have argued that their lending is hampered by a lack of demand for credit and by examiners who are cautious about risky loans.
According to the ABA data, delinquencies decreased during the third quarter in direct and indirect auto loans, marine loans, personal loans, bank card loans, property improvement loans and RV loans.
The delinquency rates increased in mobile home loans and in home equity loans. The latter category saw loan delinquencies hit a record high, jumping 0.29 percentage point to 4.3 percent of all accounts.
© 2024 Thomson/Reuters. All rights reserved.