•Late Payments On Home-Equity Loans AND Credit Cards Rose To A Record In Q1

Shoots, now with more Green.

Or is it 'chutes,' as in people jumping out of the airplane as it plunges?

U.S. Home-Equity Loan Delinquencies Set Record in First Quarter
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http://www.bloomberg.com/apps/news?pid=20601087&sid=axMDObJEk6eA

By Margaret Chadbourn

July 7 (Bloomberg) -- Late payments on home-equity loans rose to a record in the first quarter as 18 straight months of job losses and a slumping economy left more borrowers unable to pay their debts, the American Bankers Association reported.

Delinquencies on home-equity loans climbed to 3.52 percent of all accounts in the quarter from 3.03 percent in the fourth and late payments on home-equity lines of credit climbed to a record 1.89 percent, the group said. An index of eight types of loans rose for a fourth straight quarter, to 3.23 percent from 3.22 percent in October through December, the group said.

“The number one driver of delinquencies is job loss,” James Chessen, the group’s chief economist, said in an e-mailed statement. “Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround.”

The U.S. economy lost an average 691,000 jobs a month during the first quarter, and has cut about 6.5 million positions since the recession began in December 2007. Unemployment climbed to 9.5 percent in June, a 26-year high, the Labor Department said July 2. President Barack Obama last month predicted unemployment will reach 10 percent this year.

Delinquent bank-card accounts jumped to a record 6.60 percent of outstanding card debt in the first quarter from 5.52 percent in the previous period, a signal unemployed borrowers are relying on cards as falling prices erode the equity in their homes.

U.S. banks issued 9.8 million cards credit from January through April, a 38 percent decline from the year-earlier period, according to data compiled by Equifax Inc., a credit bureau, quoted today in USA Today. The average limit on a new card fell 3 percent to $4,594, Equifax reported.

300 Banks

The ABA’s survey tracks data from 300 banks, monitoring late payments on eight types of closed-end loans that are used as a benchmark for typical consumer delinquencies. The composite index rose to the highest level since the group began collecting data in October 1974. Loans are considered delinquent when a late payment is 30 days or more overdue.

Of eight loan types in the closed-end accounts, delinquencies rose on five: home-equity loans, direct auto loans, recreational vehicle, mobile home and personal loans, the group said.

The delinquency rate for indirect auto loans, made through third parties such as a car dealership, fell to 3.42 percent from 3.53 percent in the fourth quarter. Property improvement and marine loan delinquency rates also declined.

To contact the reporter on this story: Margaret Chadbourn in Washington at mchadbourn@bloomberg.net.
Last Updated: July 7, 2009 08:30 EDT

 

It's trickle-down economics, man. Just wait for the credit to seap through the economy to the consumer in the form of higher debt-loads. Then they can make their mortgage payments!