Americans late payers on most loans since 2001

By Jonathan Stempel

NEW YORK, Jan 3 (Reuters) - Americans are falling further behind on consumer loans, with late payments rising to the highest level since the nation's last recession in 2001, data released Thursday show.

In its quarterly study of consumer borrowing, the American Bankers Association said the percentage of loans at least 30 days past due rose to 2.44 percent in the July-to-September period from 2.27 percent in the previous quarter.

The delinquency rate, which covers eight loan categories, was the highest since a 2.51 percent rate in the second quarter of 2001. Late payments on some types of loans rose to levels not seen since the 1990s.

The ABA attributed some of the summer increase to rising oil prices and the inability of thousands of homeowners to keep up with mortgage payments.

"Those little expenses that keep sucking dollars out of wallets every month are what have the most impact on people's ability to pay their consumer loans," Chief Economist James Chessen said in an interview.

"My concern is that delinquencies will continue to rise, because the housing problem will worsen, and disposable income will not stretch as far," he added. "Lenders will need to take a second or third look at any consumer loans they make."

Foreclosures set a record in the third quarter, the Mortgage Bankers Association said on Dec. 6. Many borrowers have struggled to make mortgage payments as their low initial rates reset higher, while falling home prices left others owing more than their homes are worth.

The ABA said its study covers more than 300 banks that have extended a majority of outstanding consumer loans.

Losses tied to mortgages and deteriorating credit markets are expected to hurt year-end results at large lenders such as Citigroup Inc (C.N), Bank of America Corp (BAC.N), Wachovia Corp WB.N and Wells Fargo & Co (WFC.N), among others.

In the July-to-September period, the delinquency rate on home equity loans rose to a two-year high of 2.28 percent from 1.99 percent in the prior quarter, the ABA said. The rate of late payments on home equity lines of credit rose to 0.84 percent, the highest since the fourth quarter of 1997.

Meanwhile, late payments on "indirect" auto loans, which are made through dealerships, totaled 2.86 percent in the third quarter, a 16-year high.

Credit-card delinquencies fell to 4.18 percent from 4.39 percent in the second quarter.

"The hope is that will continue," Chessen said, "but that relies on job and income growth, which are tied to the strength of the economy."

The ABA study also covers direct auto, marine, mobile home, personal, property improvement and recreational vehicle loans.

(Reporting by Jonathan Stempel; Editing by Maureen Bavdek)

((jon.stempel@reuters.com; +1 646 223 6317; Reuters Messaging: jon.stempel.reuters.com@reuters.net)) Keywords: CONSUMERLOANS/PAYMENTS

(C) Reuters 2008. All rights reserved. Republication or redistribution ofReuters content, including by caching, framing or similar means, is expresslyprohibited without the prior written consent of Reuters. Reuters and the Reuterssphere logo are registered trademarks and trademarks of the Reuters group ofcompanies around the world.nN03217712