Consumer debt rose 3.7% year-over-year to $2,498 billion in December, according to Bank of America Merrill Lynch analysts in a report released last yesterday.

Analysts said this has occurred together with increases in the considerably bigger non-revolving debt sector, which went up 5.6% year-over-year to $1,697 billion.

The increase in non-revolving debt was higher than that seen in the revolving debt segment, which experienced an increase of 0.09% year-over-year to $801 billion, they stated.

The December rise comes after a slight increase in November. The last time the sector experienced back-to-back increases was in January 2009, BofA Merrill analysts reported.

Higher January vehicle sales, which are up 11.4% year-over-year, as well as expected higher retail spending should lead to increased consumer debt in January. This is projected to go up 6.0% year-over-year with BofA Merrill analysts citing Bloomberg’s survey of economists.Retail sales trended upwards by 6.0% year-over-year in December, according to BofA Merrill analysts.

The current higher spending levels and the increased willingness to lend should lead to higher balances throughout this year, analysts stated. This is despite conservative consumers and lenders keeping growth from reverting back to pre-crisis levels until economic conditions  improve vastly, analysts reported. They cited figures of 5.70%-6.00% year-over-year for total consumer debt. 

The auto and student loan segments or non-revolving debt should outpace credit cards or revolving debt, BofA Merrill analysts said.

The expected higher vehicle sales should lead to a corresponding rise in retail auto loans and leases. The growth pace for used and new vehicles has been quite comparable, which makes analysts think that growth in prime and subprime loans is comparable. Most subprime loans finance the purchase of used vehicles. Analysts are predicting $80 billion of new-issue volume in 2012 for the auto ABS sectors, representing an increase of 13% versus last year.

The anticipated higher enrollment and tuition and fees should result in corresponding increases in student loan origination volume as well as outstanding balances, they added.

Much of this growth will happen in the Federal student loan programs, FDLP not FFELP, given that headline risk, concerns regarding credit performance and a challenging financing environment should limit private student loan growth. Analysts are estimating $20 billion of new-issue volume this year for the student loan ABS segments or a rise of 16% compared with 2011.

The credit card sector should continue its growth in the upcoming months. The factors leading to higher balances include consumers spending their credit limits and having a number of open accounts. Added factors are the increased amount of marketing dollars spent and some moderate charge-offs, analysts explained.

BofA Merrill analysts are projecting $20 billion of new-issue volume in 2012 for the credit card ABS sectors, which means it a 17% rise compared with 2011.

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