Tags: Equifax | loans | borrowing | debt

Equifax: Americans Are Taking on More Debt

Tuesday, 21 May 2013 12:14 PM

By John Morgan

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New consumer borrowing has hit a five-year high, vaulting more than 33 percent from the 2010 recession lows, led by auto loans and ballooning student debt.

The Equifax credit reporting agency said new credit of $141 billion was posted in the first two months of the year.

Auto loans, which rose 13 percent to $69.6 billion, accounted for nearly half of the year-over-year gains.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

"Consumers are tired of their old, patched-up cars and demand is really starting to pick up," said Amy Crew Cutts, Equifax's chief economist.

"At the same time, there is a slight increase in the willingness of lenders to finance car purchases for consumers with less than perfect credit."

Meanwhile, student loans jumped nearly 27 percent, from $9.2 billion to $11.7 billion.
Cutts said student borrowing is increasing "well beyond just tuition increases as more and more people are attending colleges and professional training."

"In the past, some students might have relied on their parents who would have funded tuition payments using home equity lines of credit, but the small volume of home equity lending that is occurring today, at a little over $12 billion, is not sufficient to cover those costs."

Equifax said home equity lines of credit increased nearly 16 percent, to $12.4 billion, during the first two months of 2013.

On the credit card front, the national credit card delinquency rate — the ratio of borrowers 90 or more days past due — decreased to 0.69 percent in the first quarter of 2013, from 0.73 percent in the same period in 2012, TransUnion reported.

Average credit card debt per borrower declined to $4,878 in the first quarter.

"We traditionally see credit card delinquencies and balances decline during the first three months of the year as many people pay down their holiday shopping balances or use their tax refunds to pay off their debts," explained Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit.

Becker said the "number of new credit cards entering the marketplace is still significantly greater than what we saw just a few years ago."

TransUnion expects credit card delinquencies to increase slightly in the second quarter of 2013.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

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