Several portfolio metrics showed that the U.S. credit market is stabilizing and is even growing, according to Equifax's monthly National Credit Trends Report for March 2011.
The most recent trend data demonstrated sustained new credit growth is underway in some markets, with year-over-year increases in the number of auto (a 23% rise), bankcard (a 14% rise), consumer finance (a 5% rise), and home equity (a 9% rise) loans.
The report, which is issued monthly by Equifax, stated that consumers are more consistently paying credit bills on time while also paying down existing debt. This has resulted in an increase in the average credit risk score nationally, according to Equifax.
Even though credit available today is around half of pre-recession levels in 2006, it is steadily rising, with 2010 levels exceeding 2009, Equifax said. That trend is expected to continue for this year. Equifax said that this year's month-to-date new credit is $51 billion compared with 2010 new credit of $45 billion over the same period, which is an increase of more than 13%.
Among the report's key findings according to sector are: auto – average loan amounts generated through captive finance firms rising 88% over 2009 levels; first mortgages – the prime originations (Equifax risk scores of 700 or more) now comprise over 75% of all first mortgage originations; consumer loans – installment loans now make up 33.9% of total consumer loans, representing a five-year high; bankcards – over 14% rise in the number of new bankcards issued over 2010 levels; retail card – notable rise in non-prime retail card originations (Equifax risk scores of less than 660) consumers; home equity – trend data indicatesd a significant shift toward prime borrowers (lowest risk scores); and student loans – with average student loan amount has dropping in response to regulatory change with the data indicating that students are looking for 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 in 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."