WASHINGTON, D.C. — While bank card delinquencies fell to
levels not seen since the third quarter of 1994, the American Bankers
Association's latest Consumer Credit Delinquency Bulletin showed mixed
movements in the auto finance space.

ABA found that fourth quarter delinquencies connected with indirect
auto loans — contracts originated at dealerships — fell from 2.08 percent to
1.85 percent. Meanwhile, Q4 delinquencies associated with direct auto loans —
financing arranged directly at banks — ticked up slightly from 0.95 percent to
0.96 percent.

During the fourth quarter of 2012, the report said bank card
delinquencies fell 28 basis points to 2.47 percent of all accounts — an 18-year
low and well below the 15-year average of 3.87 percent.

The composite ratio — which tracks delinquencies in eight
closed-end installment loan categories — fell 17 basis points to 1.99 percent
of all accounts in the fourth quarter, below the 15-year average of 2.39
percent. 

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

ABA chief economist James Chessen attributed the overall improvement
to consumers' continued efforts to build a financial buffer against economic
uncertainty.

"Consumers continue to carefully manage their finances in an
effort to get debt levels under control and build up a secure financial base,"
Chessen said. "While this conservative approach to credit may slow economic
growth in the short-term, it portends stronger, more consistent growth in the
future. The sharp decline in delinquencies reinforces the notion that the
economic recovery has become more self-sustaining and is on a path to increased
growth."

Chessen noted that delinquencies in all three home-related
loan categories — property improvement loans, home equity loans and home equity
lines of credit — fell in the fourth quarter. 
This is the first time all three of these categories have seen
delinquencies decline since the fourth quarter of 2011.

"While home-related delinquencies remain at elevated levels,
even one quarter of declines could signal the start of a slow, but steady
improvement. Falling delinquencies are another indicator of the housing
market's nascent recovery." Chessen said. 

While Chessen found the continued decline encouraging, he
cautioned that future challenges could make it difficult for some consumers to
meet their financial obligations. 

"Make no mistake about it, a great deal of uncertainty still
lingers over this economy," Chessen said. "Furloughs from sequestration,
falling disposable income and increased healthcare and regulatory costs for
businesses could lead to challenges in the year ahead." 

The fourth quarter 2012 composite ratio is made up of the
following eight closed-end loans.  All
figures are seasonally adjusted based upon the number of accounts.

—Personal loan delinquencies fell from 2.14 percent to 2.08
percent.

—Direct auto loan delinquencies rose from 0.95 percent to
0.96 percent.

—Indirect auto loan delinquencies fell from 2.08 percent to
1.85 percent.

—Mobile home delinquencies rose from 3.51 percent to 3.53
percent.

—RV loan delinquencies held steady at 1.27 percent (no
change).

—Marine loan delinquencies rose from 1.55 percent to 1.57
percent.

—Property improvement loan delinquencies fell from  0.89 percent to 0.83 percent.

—Home equity loan delinquencies fell from 4.20 percent to
4.03 percent.

In addition, ABA tracks three open-end loan categories:

—Bank card delinquencies fell from 2.75 percent to 2.47
percent

—Home equity lines of credit delinquencies fell from 1.93
percent to 1.85 percent.

—Non-card revolving loan delinquencies rose from 1.28
percent to 1.31 percent.

Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.