Consumer delinquencies up in first quarter: ABA
Housing weakness adds to woes with equity lines of credit
WASHINGTON (MarketWatch) -- Delinquency rates for home-equity lines of credit and bank cards rose during the first quarter, the American Bankers Association reported Wednesday, citing ongoing stress in the nation's housing market as well as general economic weakness.
On a seasonally adjusted basis, the percentage of HELOC accounts more than 30 days past due rose to 1.1%, up 0.14 of a percentage point, reaching the highest rate recorded since the ABA started the series in 1987. Read more on how homeowners are being surprised by HELOC cuts.
Delinquencies for bank cards -- credit cards provided by a bank -- rose 0.13 point to 4.51% in the first quarter, compared with the five-year average delinquency rate of 4.40%.
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Higher prices for food and energy, combined with weak growth in personal incomes and declining home-equity and stock values, are making it difficult for a greater number of consumers to meet their obligations, said James Chessen, ABA's chief economist. The group defines delinquency as late payments that are 30 days or more overdue.
"It was a tough quarter for some people," Chessen said. "Faced with rising food and gas prices and little income growth, fewer resources have been available to manage debt."
He added that delinquencies will, in all likelihood, remain elevated.
"The tax stimulus is helping to boost personal income, but persistently high gas and food prices will eat away at overall resources," Chessen said.
Among closed-end loans in the first quarter, home-equity delinquencies fell to 2.34% from 2.39% in the prior quarter, on a seasonally adjusted basis, while indirect auto delinquencies dropped to 3.09% from 3.13% and property improvement delinquencies dipped to 1.78% from 1.81%.
Other closed-end loan delinquencies rose.
Marine delinquencies gained to 1.75% from 1.57%, the ABA's data showed.
Delinquencies on loans for recreational vehicles increased to 1.11% from 1.08%, while mobile-home delinquencies reached 3.22% from 2.92%.
Direct auto delinquencies increased to 1.92% from 1.9%. And personal delinquencies climbed to 2.55% from 2.48%.
Elsewhere Wednesday, the ADP employment index showed that private-sector firms in the U.S. lost 79,000 jobs in June, the biggest loss since November 2002. Employment in the services sector fell by 3,000, the first decline since November 2002. Read full story.
Meanwhile, outplacement firm Challenger Gray & Christmas Heavy reported that cost-cutting in the financial services pushed corporate-layoff announcements up 21% in the first half of 2008 compared with last year. See full story. 
Ruth Mantell is a MarketWatch reporter based in Washington.
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