Consumers still struggling with loans – ABA

* Delinquency rate on consumer loans increases slightly

* ABA says rates could improve in coming months

By Dave Clarke

WASHINGTON, Jan 11 (BestGrowthStock) – U.S. consumers continue to
struggle to pay back home equity, auto and other loans as high
unemployment drags on the economy.

The American Bankers Association said in a report released
on Tuesday that the overall loan delinquency rate ticked up
slightly for the second straight quarter. It had been dropping
steadily since hitting 3.35 percent in the second quarter of
2009.

The overall rate increased to 3.01 percent in the third
quarter of 2010 from 3.00 in the second quarter.

The ABA defines a delinquency as a payment that is 30 days
or more overdue.

The association attributed the lack of downward movement to
the unemployment rate, which remains high, but said delinquency
rates are likely to improve soon.

“The economy just skipped a beat in the third quarter,” ABA
Chief Economist James Chessen said in a statement. “It doesn’t
move in a straight line and neither do consumer credit
delinquencies.”

Unemployment numbers have improved slightly since the third
quarter, meaning the delinquency rate could start dropping
again when numbers for the fourth quarter of 2010 are
reported.

The unemployment rate in December was 9.4 percent down from
9.8 percent in November.

Chessen also argued that a deal between the White House and
congressional Republicans over taxes for the next two years
could help the economy by providing more certainty about income
tax rates.

“I think we’ll see momentum return and delinquencies
improve over the next six months,” Chessen said.

Among the areas where consumers had a more difficult time
repaying their debts was in auto loans. The delinquency rate
for loans provided by a bank increased from 1.67 percent to
1.74 percent and delinquencies on loans arranged through a
dealer or other third party increased from 3.01 percent to 3.02
percent.

The delinquency rate on credit cards issued by banks also
increased moving to 3.64 percent in the third quarter from 3.62
percent during the previous time period.

One area where the delinquency rate dropped was in marine
loans for such things as boats. The rate fell from 2.2 percent
to 2.04 percent.

(Reporting by Dave Clarke, Editing by Bernard Orr)