New Credit Trends Led by Bankcards

New Credit Trends Led by Bankcards

New Credit Trends Led by Bankcards

Equifax Inc.’s monthly Credit Trend Report showed that bankcards were the leader in the development of new credit during November 2010. The report also offered proof that delinquency rates are steadily falling. Consumer debt declined to $10.6 trillion during the month, a fall of 8.2 percent since the $11.5 trillion peak that occurred in October 2008.

New card growth has begun to rise recently, despite the overall balances on cards slowly declining over the past two years. 2.8 million new accounts were opened in the month of September, which shows a 17.3 percent rise over the last year’s September total. Lenders are extending new loans to subprime borrowers very cautiously at this point after the recession, but they are slowly increasing since May of this year.

Experts with Equifax believe that these new trends in credit and lending are due to a slow and gradual recovery of the economy. They also say that despite the new credit opening up for borrowing, most consumers are not increasing their debt and are instead using these opportunities to deleverage their credit card and mortgage bills.

Auto loans also showed growth during 2010, despite governments incentives in 2009 that also caused a spike in new automobile sales. Over the last year new auto loans have increased by 11.5 percent. Mortgages at least a month late also dropped in November, following a trend that began six months ago. However, there are still 2% more late mortgages this November than there were last year at the same time. New lines of home equity credit only equaled 24 percent of those created in September 2006, and remain primarily extended to low risk consumers.

Foreclosure and forfeiture on homes is continuing to rise, increasing almost 70 percent since the same time last year. Modifications have also decrease, meaning homeowners are continuing to lose their homes and are unable to negotiate with their lenders.


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