More U.S. consumers are keeping up with their loan payments as they enjoy a boost from the strong economy.
During the fourth quarter of last year, late-payment rates at banks declined in nine out of the 11 consumer loan categories tracked by the American Bankers Association, according to seasonally adjusted data released Wednesday.
The improved performance, in comparison with the third quarter of 2017, spanned auto loans, personal loans, home equity loans and credit cards. The percentage of credit card borrowers who were at least 30 days late fell to its lowest level in three and a half years.
ABA Chief Economist James Chessen attributed the stronger credit performance to improvements in the U.S. labor market.
“It’s rare to see delinquencies fall in nearly every category,” he said in a press release. “The steady creation of new jobs has been essential to keeping delinquencies low, and we’ve seen more than 10 million jobs filled in the past four jobs.”
“Greater job stability and increased take-home pay have allowed consumers to make more purchases while keeping balances low relative to their income,” Chessen added.
The fourth-quarter data looked good in part because it was immediately preceded by a comparatively weak report. In the third quarter of 2017, an index of late-payment rates for eight closed-end loan categories hit its highest level in more than four years, though it remained well below its 15-year average.
The ABA uses a quarterly survey of banks to track trends in consumer credit performance.
During the fourth quarter, home equity lines of credit were one of two categories in which a larger percentage of borrowers were delinquent.