Equifax Data Indicates Widespread Credit Growth
ATLANTA - Multiple portfolio metrics indicate that the U.S. credit market is stabilizing and is growing, according to Equifax's monthly “National Credit Trends Report” for March 2011.
The most recent trend data indicates that sustained new credit growth is underway within a number of markets, with year-over-year increases in the number of auto (23 percent increase), bankcard (14 percent increase), consumer finance (5 percent increase), and home equity (9 percent increase) loans. According the report issued monthly by Equifax, consumers continue to more consistently pay credit bills on time while simultaneously paying down existing debt, resulting in an increase in the average credit risk score nationally, reported F&I and Showroom.
Although credit available today represents about half of pre-recession levels in 2006, it is steadily increasing, with 2010 levels exceeding 2009 and that trend is expected to continue for this year. (2011 month-to-date new credit is $51 billion versus 2010 year-to-date new credit of $45 billion, an increase of more than 13 percent.)
Notable findings of the most recent report include:
Auto – Average loan amounts generated through captive finance companies up 88 percent over 2009 levels.
First Mortgages – Prime originations (Equifax risk scores of 700 or more) now represent more than 75 percent of all first mortgage originations.
Consumer Loans – Installment loans now represent 33.9 percent of total consumer loans, representing a 5-year high.
Bankcards – More than 14 percent increase in number of new bankcards issued over 2010 levels.
Retail Card – Notable increase in retail card originations for non-prime (Equifax risk scores less than 660) consumers.
Home Equity – Trend data indicates a considerable shift toward prime borrowers (lowest risk scores).
Student Loans – As average student loan amount has declined in response to regulatory changes, data indicates students seeking supplemental credit to finance education.
"Across multiple loan products, we are clearly seeing indicators of sustained credit growth – most notably within automobile finance and bankcard originations," said Michael Koukounas, senior vice president of special client services for Equifax. "Consumer behavior is now fueling much of this improved loan performance as borrowers are more aggressively paying off their outstanding debts, which is positively impacting their credit risk scores and making them more attractive to lenders. If this trend continues, I would expect to see a further loosening of available credit."
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