Consumer-loan delinquencies keep falling

The rate of missed payments on consumer loans has continued to fall and is well below the average for the last 15 years, reflecting the improved economy, cautious consumer behavior and tight lending standards.

Fourth-quarter 2012 delinquencies on bank cards were at the lowest level since 1994, according to the latest quarterly report from the American Bankers Assn., 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.

The 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 to 1.99% of the loans in the fourth quarter from 2.16% in the third 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, meanwhile, are still keeping loan standards stringent and writing off many loans as uncollectable, which gets the duds off the books and out of the survey. The approach may slow economic growth in the short term, Chessen said, but it 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.”