Loan Delinquency Rate Up, Banks Report : Debt: Economists disagree on the severity of the crunch. Some financial institutions tighten lending terms.

With consumer debt at a record level, banks say borrowers are falling behind on repaying loans and bankruptcies are on the rise.

The Federal Reserve Board said Tuesday that banks reported in a quarterly survey that slower economic growth also is contributing to a higher loan delinquency rate.

Loan officers at 33 of 54 banks surveyed said consumer loan delinquency rates have risen over the past year. Most said the increase was expected, given a slowing economy and rapidly rising lending.

The Fed reported two weeks ago that consumer borrowing rose by $5.4 billion at an annual rate in September, the 28th straight advance. But the report also showed that the buildup in debt is slowing.

The September consumer credit increase was 6.6% at an annual rate, compared to a 12.7% rate in August.

Analysts said consumer spending is climbing at a slower pace as borrowing has shot up about 30% over the last two years.

Economists disagree on the severity of the debt crunch. Some contend that as a portion of household income, the money that Americans owe is still within a safe range and the economy is growing--albeit at a modest pace.

The most recent report by the American Bankers Assn. said the percentage of consumers behind in loan payments rose in the spring for the third straight quarter. The trade group said a seasonally adjusted 1.95% of loans were 30 or more days past due in the second quarter, up from 1.82% three months earlier.

In Tuesday’s report, the Fed said banks reported that household demand for credit increased at a slower pace in the last three months. Only about 15% of the banks reported higher demand for residential mortgages, down from 50% in an August survey.

Some banks have tightened lending terms and standards and raised rates for consumers. But the Fed said most banks reported that any such moves were minimal.

The Fed reported three months ago that demand for consumer loans and mortgages grew sharply in the late spring and summer and banks made it easier for businesses to borrow cash.

On the commercial borrowing side, some banks said they eased standards for business loans because of aggressive competition among lenders.