U.S. consumer delinquencies dropped sharply in the third quarter of 2013 as the economy grew and the housing market improved, the American Bankers Association said on Thursday.
Late payments dropped significantly in two home-related loan categories, the bank industry group said. Home prices rose during the period, for their strongest year-over-year gain in more than seven years in September.
"More jobs and higher income are a recipe for lower delinquencies," said James Chessen, the ABA's chief economist. The group also said consumers managed their finances better during the quarter.
The bankers association defines a delinquency as a payment that is more than 30 days overdue. It does not track traditional mortgage payments.
A composite ratio that reflects late payments in eight loan categories, including personal and auto loans, fell 13 basis points during the quarter to 1.63 percent of all accounts, a record low, the ABA said.
The U.S. economy expanded at the fastest pace in nearly two years during that period.
Consumer delinquencies are expected to hover at low levels as the economy continues to improve, the bank group said. Late payments declined or held steady for nearly all of the categories in the composite ratio during the third quarter, although delinquencies rose for property improvement loans.
Late payments on bank cards, which are not included in the composite ratio, rose to 2.55 percent from 2.42 percent in the second quarter. Bank card delinquencies remain well below their 15-year average, the ABA said.