The American Bankers Association (ABA) says delinquencies on home equity loans dropped to 3.48 percent in the fourth quarter 2013, down from a cyclical peak of 4.20 percent in the third quarter 2012 and marking the lowest level since late 2008. However, credit card delinquencies totaled 2.60 percent in the fourth quarter, reaching a five-quarter high despite being well below their late 2011 levels.
ABA chief economist James Chessen says, "The home equity delinquencies are still higher than they really should be in a normal economic environment, and there's plenty of room for those delinquencies to come down, [but credit card delinquencies have been] so low, it's hard to imagine them going much lower."
Meanwhile, a composite ratio that tracks delinquencies in eight closed-end loan categories, including home equity and auto loans, hit a record low of 1.59 percent. Although he remains concerned about people without savings or a financial buffer to cushion the blow when there is a disruption in income, Chessen says, "It's hard not to be positive when you see delinquencies declining in most categories."