Late payments on home equity loans climbed to a 1½-year high in the opening quarter of this year, while delinquencies on credit card bills fell, painting a mixed picture of how people are managing their debt.
The American Bankers Association, in its quarterly survey of consumer loans, reported Tuesday that late payments on home equity loans rose to 2.15 percent in the January-to-March quarter. That was up sharply from 1.92 percent in the final quarter of last year and was the highest since the late summer of 2005.
“There are still signs of consumer financial distress, which will continue throughout most of this year as the worst of the housing problem works its way through the economy,” said James Chessen, the association’s chief economist.
Payments are considered delinquent if they are 30 or more days past due. The survey is based on information supplied by more than 300 banks nationwide.
The survey also showed that the delinquency rate on a composite of other types of consumer loans, including those for autos and boats, home improvement and for certain home equity loans, increased to 2.42 percent in the first quarter. That was up from the fourth quarter’s 2.23 percent delinquency rate and was the highest since the second quarter of 2001, when the economy was in a recession. The rise for the composite was driven by home-equity loan delinquencies, Chessen said.
On a brighter note, late payments on credit card bills dropped in the first quarter to 4.41 percent. That was down from 4.56 percent in the fourth quarter and was the best showing in nearly a year.
“The improvement in credit card late payments is somewhat remarkable, given that the economy was not operating on all cylinders,” Chessen said.
The economy barely budged in the first quarter, growing at a pace of just 0.7 percent, the weakest in more than four years. Fallout related to the housing slump was a main factor behind the feeble showing.
After a five-year boom, the housing market tanked last year. The combination of rising interest rates and falling house prices clobbered some homeowners — especially those with tarnished credit histories and adjustable-rate mortgages. Late payments and new foreclosures for those borrowers spiked to all-time highs in the first quarter, according a separate survey by the Mortgage Bankers Association, released last month.