abalogohlThe default rate on RV loans crept up slightly during the first quarter of 2009, from 1.38% to 1.52%, according to an American Bankers Association (ABA) Consumer Credit Delinquency Bulletin.

The slight rise was just enough to nudge the RV loan sector out of the best-performing among eight closed-end loans surveyed by the ABA.

Property improvement loan delinquencies decreased from 1.75% to 1.46% to take over the best-performing spot. It was one of three loan types to show lower delinquency default rates in the quarter.

Meanwhile, a record wave of job losses is being cited as a major factor in a record rate of consumer delinquencies in the quarter, according to the ABA.

More than 2 million Americans lost their jobs in the first three months of the year with more than 6 million jobs lost since the recession began.  The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, rose to 3.23% of all accounts (seasonally adjusted) compared to 3.22% of all accounts in the previous quarter.

The delinquent balances on those accounts also rose from 3.16% to 3.35% of total balances due (not seasonally adjusted).  The ABA report defines a delinquency as a late payment that is 30 days or more overdue. 


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

  • Home equity loan delinquencies increased from 3.03% to 3.52%.
  • Property improvement loan delinquencies decreased from 1.75% to 1.46%.
  • Indirect auto loan delinquencies decreased from 3.53% to 3.42%.
  • Direct auto loan delinquencies increased from 2.03% to 3.01%.
  • Marine loan delinquencies decreased from 2.35% to 2.04%.
  • RV loan delinquencies increased from 1.38% to 1.52%.
  • Mobile home loan delinquencies increased from 2.96% to 3.70%.
  • Personal loan delinquencies increased from 2.88% to 3.47%. 


ABA Chief Economist James Chessen said the figures are a natural consequence of mounting job losses in a weakening economy. 

“The number one driver of delinquencies is job loss,” Chessen said.  “When people lose their jobs, they can’t pay their bills.  Delinquencies won’t improve until companies start hiring again and we see a significant economic turnaround,” Chessen said, adding that job growth is not likely to improve in the foreseeable future.  “However, many people are taking greater control of their finances by cutting spending, lowering debt and saving more money.”

Chessen said the unemployed may be using bank cards to bridge a temporary income gap, especially with less home equity to fall back on as housing prices continue to fall.  Bank card delinquencies rose 23 basis points to 4.75% (s.a.) of all accounts, compared to 4.52% in the previous quarter.  (The record was 4.81% in the second quarter of 2005.)  However, the balances on those delinquent accounts rose dramatically, up 108 basis points to 6.60% (n.s.a.) of the value of all outstanding bank card debt, marking a new record.

Reflecting continued weakness in the housing sector, delinquencies for the home equity category also hit record highs:  home equity loan delinquencies rose 49 basis points to 3.52% of accounts, and home equity lines of credit delinquencies rose 43 basis points to 1.89% of accounts. 

“Even if home prices stop falling later this year, unemployment will keep home equity delinquencies high for some time,” Chessen said.