More Consumers Are Behind on Their Loans

More Americans have fallen behind on consumer loans than at any time in nearly 16 years, as credit problems once concentrated in mortgages have spread into other forms of debt, according to the American Bankers Association.

In a quarterly study, the association said the percentage of loans at least 30 days past due rose to 2.65 percent in the fourth quarter, from 2.44 percent in the third quarter and 2.23 percent a year earlier.

The rate of delinquencies was the highest since a 2.75 percent rate in the first quarter of 1992.

"There’s no question that the economy is weakening beyond housing, resulting in the loss of household purchasing power," said John Lonski, chief economist at Moody’s Investors Service.

"Deterioration of household credit should continue through 2008, though the rate may moderate," he said. "If it intensifies, then the current recession may prove more severe than anticipated."

The association’s chief economist, James Chessen, attributed the jump in the delinquency rate largely to auto loans.

Late payments on "indirect" auto loans, which are made through dealerships, totaled 3.13 percent, the highest on record. Delinquencies on direct auto loans rose to 1.90 percent, a 2 ½-year high.

Credit and debit card delinquencies rose to 4.38 percent, from 4.18 percent in the third quarter, after four consecutive quarterly declines.

Delinquencies on home equity loans rose to a 2 ½-year high of 2.39 percent, and on home equity lines of credit delinquencies rose to 0.96 percent, matching a level last seen in the fourth quarter of 1997.

The association’s study covers more than 300 banks that extend a majority of outstanding consumer loans. It covers direct auto, indirect auto, home equity, home improvement, marine, mobile home, personal and recreational vehicle loans.

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