Auto Sector Highlights Credit Rebound Projection from Equifax and Moody’s Analytics
ATLANTA — New U.S. consumer credit data from a joint product of Equifax and Moody's Analytics projects a rebounding consumer environment, along with recovering home and auto markets this year.
As numbers reflect pre-recession totals, Equifax and Moody's predicted through CreditForecast.com on Monday that consumers should anticipate steady economic growth in major sectors.
Among lending sectors, analysts pointed out home mortgages continue to see the highest percentage of delinquencies as delinquency rates in auto, bankcard and consumer finance are back to pre-recession levels.
Equifax and Moody's explained rising vehicles sales are driving an increasing demand for financing.
The firms pointed out growth in bank and finance originations continue to trend upward nationally with loan inquiries up 27 percent. They think the developments demonstrate continued positive momentum.
"After spending recent years in the financial doldrums, U.S. consumers are poised to make a comeback in 2012," stressed Equifax chief economist Amy Crews Cutts.
"The most promise we have seen has primarily been within the consumer spending and auto financing sector, while the housing market continues to see incremental progress towards gaining traction in the coming months," Cutts continued.
Analysts carved out other CreditForecast.com report highlights:
—Consumer Lending: Analysts indicated households are increasingly reducing their debt as consumer balances are down $187.8 billion from early 2009 totals.
"Credit more appropriately matches consumer wealth and income levels today," stated Equifax and Moody's. "Increased solicitations for credit cards are being seen, accompanied by a 41 percent increase credit card inquiries since the recession low."
In 2011, analysts tabulated the number of new bank credit card accounts hit 10 million for the first time since 2008, and the upward trend is expected to continue into 2012.
"Consumer optimism may be the cause of these increases as spending continues to maintain healthy increases," noted analysts, who added retail sales were up 7.7 percent last year, the strongest showing since 1999.
—Student Lending: Equifax and Moody's acknowledged student lending is rapidly increasing, reflecting the impact of a poor job market that may be causing more students to stay in college and others to return to gain new skills.
"As the student loan debt has risen in stride with the declining labor market, delinquency rates have been steadily increasing, resulting in a high volume of accounts that are two or more payments past due or in collections," analysts explained. "Heading into 2012, however, unemployment is expected to drop further, which may slow the growth of this lending sector over the course of the year."
—Mortgage Lending: Equifax and Moody's determined outstanding balances of home mortgages (including first liens and home equity lines and loans) declined by $1 trillion or 10.4 percent since 2008 and continue to drop.
"Mortgage rates are at all-time lows, and refinance shares are high but mortgage originations are not responding to low rates," analysts surmised. "Tighter lending guidelines are reflected in loans made to the prime risk segment (Equifax risk scores of 700 or higher), which now comprise more than 80 percent of all new mortgage originations."
Equifax and Moody's reiterated that Creditforecast.com is meant to provide history and forecasts for a wide range of household credit, economic and demographic variables across targeted geographic markets throughout the U.S. — enabling customers to examine, segment and stratify credit risk and economic data.
CreditForecast.com covers all major consumer product lines including first mortgage, home equity, auto loans, bankcards, student loans, consumer finance and retail.
For more information, visit www.creditforecast.com, email help@economy.com or call (866) 275-3266.