WEST CHESTER, Pa. (7/28/15)--The credit environment for both consumers and lenders continues to be amenable to growth as household credit increased for the eighth consecutive month, according to CreditForecast, a joint project of Equifax and Moody’s Analytics.
Total household borrowing rose $199 billion, or 1.8%, year over year in June, buoyed by continued strength in the auto market, which has experienced eight consecutive quarters of at least 10% year-over-year expansion. The first four months of 2015 averaged a 0.5% yearly growth rate, and both May and June have averaged 1.6% year-over-year growth.
Overall credit card levels reached $570 billion, with 2.7 million new accounts. The 1.2 million new accounts in the subprime lending space are the highest since August 2007.
“Bank cards in particular have indicated expansionary credit policies, simultaneously seeing rises in subprime lending in both accounts and balance and seeing reduced delinquency rates,” said Alan Boulier (Economy.com July 24). “Continued low delinquency and charge-off rates across all lines will further prompt expansionary lending policies.”
Borrowing will continue to increase in lower-risk score brackets as credit restrictions steadily relax, the Moody’s analyst noted.
Year over year, first-mortgage delinquencies have fallen $50 million, bringing down the percentage of active balances to 3.1%. Delinquencies of more than 120 days have dipped to 1.17% this June from 1.59% a year prior.
Uncertainty lingers regarding the monetary policy of the Federal Reserve board, which may indicate during its Wednesday meeting its intentions to raise interest rates.