CFPB Data Reveals Low Delinquency Rates, But Time Will Tell If That Continues, post-Pandemic

The Consumer Financial Protection Bureau has updated a report it first released last year that detailed the delinquency rates on major types of credit in order to illustrate how consumers were being financially affected by the COVID-19 pandemic. Now looking at data through the end of April 2021, the CFPB’s data indicates that delinquency rates on auto loans, student loans, credit cards, and mortgages are still below pre-pandemic levels, but “time will tell whether delinquencies begin to rise again through the summer and fall of 2021.”

Delinquency rates are presented in two ways in the report — loans that were current and then became delinquent when the consumer stopped making payments, or loans that were already delinquent and became more delinquent because additional payments were missed.

It is interesting to look at the data and overlay when consumers would have received stimulus payments from the federal government, because there are corresponding dips in the delinquency rates, especially for auto loans and mortgages. The delinquency rates on student loans have remained near zero, likely because of forbearance programs that have been put into effect (but are scheduled to end in September). For credit cards, delinquency rates fell during the first few months of 2020 and have remained relatively constant since then, although there has been an increase in the number of accounts that were current and are then became delinquent in the past six months.

There are a lot of questions about what will happen to delinquency rates now that the pandemic appears to be ending. States are ending their emergency declarations, ending additional unemployment benefits, and forbearance programs. Increased economic activity in the form of a tight labor market may help keep consumers flush with cash and able to pay their debts while others who have had their loans in forbearance may suddenly find themselves struggling to make all of their payments again.

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