Consumer loan delinquencies fell sharply in the second quarter ended June 30, thanks to large drops in home loan-related delinquencies, according to the American Bankers Association.

Delinquences fell in seven of the 11 loan categories, according to the ABA Consumer Credit Delinquency Bulletin released Thursday. 

The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, dropped 17 basis points to 1.36% of all accounts - well under the 15-year average of 2.27%.

Bank card delinquencies rose by three basis points to 2.52% of all accounts, also well below their 15-year average of 3.74%. Home equity lines of credit delinquencies fell from 1.42% to 1.34%. Non-card revolving loan delinquencies fell from 1.91% to 1.80%.

Delinquencies in two of the three home-related categories - home equity loans and home equity lines of credit - trended downward, with home equity loan delinquencies dropping by 22 basis points, according to ABA Chief Economist James Chessen. 

"There is a strong correlation between rising home prices and falling home-related delinquency rates,” he said. "As the housing market continues to gain strength, we expect home equity loan delinquencies to continue their downward trend."

Chessen added that credit card delinquencies have remained considerably low by historical standards as consumers hold a sharp focus on keeping debt at reasonable levels. Chessen expects delinquency levels to hold near record lows despite some expected challenges.  "A strong job market and rising incomes will go a long way toward keeping delinquencies at these historically low levels," said Chessen. "With global events creating more uncertainty about the pace of the U.S. economy, it’s even more important for consumers to maintain their disciplined approach to managing debt."  

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