Late Loan Payments Hit Record High

Late payments on consumer loans in last year's third quarter hit the highest level since record-keeping began in 1980, the American Bankers Association said Wednesday.

The association said delinquencies rose to a seasonally adjusted 2.9 percent from 2.68 percent in the second quarter. The number is a composite ratio reflecting the percentage of accounts across eight categories of consumer loans with payments overdue 30 days or longer.

The previous record was 2.88 percent, set in the third quarter of 1989, ABA spokeswoman Carol Kaplan said.

The problem started with mortgages, reports CBS News business correspondent Anthony Mason, but now delinquencies on auto loans and home equity loans have reached record levels. And a new study says it's spreading to credit cards.

Since July, the study found, balances that are more than 60 days past due have risen more than 34 percent, Mason reports, and 5 percent of all credit card borrowers are now more than 2 months behind.

The Washington-based ABA said delinquencies hit record levels in the July-through-September period for two types of loans: indirect auto loans and home equity lines of credit.

Indirect auto loans, which account for 90 percent of auto loans, are bank loans arranged through a third party such as an auto dealer. Delinquencies for those loans jumped to 3.25 percent from 3.07 percent in the second quarter, the ABA said. The previous record in that category was 3.13 percent, set in the fourth quarter of 2007.

Delinquencies for home equity lines of credit rose to 1.15 percent from 1.08 percent. The previous quarterly high in that category was 1.1 percent, set in last year's first quarter.

"The number one factor in rising consumer credit delinquencies is job losses," said James Chessen, the ABA's chief economist. "With one million jobs lost in the first three quarters (of 2008) and two and a half million expected for the year, delinquencies of all types of consumer loans will likely increase in the coming quarters."

The bank card category was one of only two that showed a third-quarter decline in delinquencies, dropping to 4.2 percent of all accounts from 4.54. The other category that fell was direct auto loans, with delinquencies declining to 1.71 percent from 1.77 percent.

In addition to indirect auto loans, categories that make up the composite ratio and posted increases in third-quarter delinquencies included: property improvement, marine, recreational vehicle, mobile home, personal loans and home equity loans.