Consumer loan delinquencies declined modestly in the third quarter, the American Bankers Association said Wednesday.

Its quarterly delinquency report showed the number of loans of all types 30 days or more past due amounted to 2.29% of accounts, down from 2.35% in the second quarter and 2.52% in the third quarter of 1997.

The credit card delinquency rate was unchanged from the second quarter, at 3.28%, though the percentage of dollars delinquent rose to 4.63% from 4.57%.

The credit card results were improved from last year's third quarter, when 3.53% of accounts and 5.31% of loan balances were overdue.

The ABA said these are signs that more people are paying their bills on time.

"Consumer financial health seems to be better today than several months ago," said James Chessen, the association's chief economist. "The fact that delinquencies are staying level or declining is positive as the economy slows down."

For a composite of seven closed-end loan categories-including personal, home equity, auto, and mobile home but not credit card loans-the percentage of dollar balances delinquent was unchanged from the second quarter, at 1.83%.

Mr. Chessen said a boom in home loan refinancing has helped the overall picture. The ABA estimates that $700 million of these loans are being made in 1998, leaving people with extra cash that can be used to pay other debts or support other spending.

Trends among the individual loan categories were mixed, but the ups and downs were slight.

The number of home equity loans delinquent decreased to 1.21% from 1.22% in the second quarter. At the same time, the percentage of delinquent dollars rose to 0.75%, from 0.72%.

The quality of direct automobile, mobile home, and home improvement loans declined. Some 2.11% of direct auto loans were delinquent in the third quarter, up from 2.02% in the second; 5.11% of mobile home loans, up from 4.80%; and 1.85% of home improvement loans, up from 1.75%.

Mr. Chessen said banks have reduced their exposure to chargeoffs by tightening underwriting standards and securitizing parts of their portfolios.

Consumers are "trying to meet their obligations," Mr. Chessen said, but the economy is a wild card. High job losses and a stock market slump would "certainly affect delinquencies and have an impact on our economy," he said.

James Annable, chief economist at Bank One Corp. in Chicago, painted a more optimistic picture. "What you've got is an economy that is growing very rapidly and is robust," he said.

Domestic exporters have been hit hard by the turbulence in foreign markets. But at the same time, "prices fall, and that generates other income" for U.S. consumers, Mr. Annable said. "Give them a buck, and they will spend a buck."

He said the flow of capital into U.S. Treasury securities and Federal Reserve decisions have pushed interest rates down, encouraging borrowers to refinance.

"It's certainly not an environment where you would expect a deterioration of credit quality," Mr. Annable said.

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