Late payments on home equity loans fell in the third quarter while delinquencies on home equity lines of credit rose slightly, the American Bankers Association said in a report issued Thursday.

Delinquencies on home equity loans dropped to 3.24% in the third quarter, from 3.36% in the second quarter, according to the report. Late payments on home equity lines increased from 1.50% to 1.52% during the same time period.

The ABA defines a delinquency as a late payment that is at least 30 days overdue. Its quarterly report on delinquencies does not include data on the largest category of consumer debt, first mortgages.
But the report does track delinquency rates for home equity loans and lines.

In 2015 and beyond, many home equity loans will reset to higher interest rates, a long-anticipated development that has sparked concern about borrowers' ability to shoulder the heavier debt load.

James Chessen, the ABA's chief economist, said it's probably too early to determine how home equity borrowers will handle the larger monthly payments, but noted that lenders have been working with their customers to restructure loans in order to minimize payment shock.

The overall report showed that the sharp nationwide drop in gas prices is allowing more U.S. consumers to stay current on their debts. During the third quarter, delinquency rates fell in seven of the 11 consumer loan categories tracked in the report, continuing a broad trend of improvement that dates back several years. Also in the third quarter, gas prices began a decline that has since accelerated.

Among the loan types where delinquency rates fell: car loans arranged through automobile dealers, personal loans and property-improvement loans. The delinquency rate for an index of eight closed-end loan categories dropped from 1.57% in the second quarter to a record low of 1.51%.

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