ATLANTA (10/4/13)--The total outstanding balances in August on auto loans and credit cards rose from August 2012,with bank-issued credit cards experiencing increases in two consecutive months for the first time in five years, said Equifax's latest National Consumer Credit Trends Report.
Retail card balances have notched 24 consecutive months of year-over-year growth. The total balance of existing auto loans is at its highest level in more than five years, said Equifax.
The statistics are consistent with the Monthly Credit Union Estimates for August compiled by the Credit Union National Association, where credit union new-car loan balances are surging, with an 11.9% increase the past year. (See related News Now
story CUNA: Loan Growth Leads a Strong August by using the link.)
Changes in balances from August 2012 to August 2013 included:
- Auto loans, up 9.7% to $834.4 billion from $760.8 billion;
- Bank credit cards, which rose 0.2% to $537.8 billion from $537 billion; and
- Retail credit cards, which increased 7% to $55.9 billion from $51.9 billion.
Auto loan and credit card portfolios are the only two major segments in which rising balances accompany improving delinquency rates. Year-over-year changes in the 60-day plus delinquency rates, as a percentage of total balances outstanding, included:
- Auto loans, whose delinquencies decreased more than 10%--to 1.14% from 1.28%;
- Bank credit cards, which decreased more than 13%--to 1.81% from 2.10%; and
- Retail credit card: decreased 0.9%--to 3.34% from 3.37%.
The data indicate that American consumers are being very disciplined in their use of credit, said Equifax Chief Economist Amy Crews Cutts. "It's like they've gone on a debt-diet and they are really sticking to it, with modest increases in line with capacity to repay," she said.
"If we exclude student loans, total consumer debt is down 15% from its peak, and delinquency rates outside of home loans and student loans are back to pre-recession levels. Economic conditions are causing the lingering high default rates on student loans and mortgages, and hopefully we will see those improve more quickly in coming months," she added.
Other highlights from the most recent Equifax data:
- Auto loans: The total number of loans outstanding in August 2013 is more than 61 million, a 57-month high. By source, loans funded by credit unions, banks, or savings and loans total $401.7 billion, while the total number of loans is 29.5 million--a five-year high for both. The total outstanding balance for loans funded by auto finance companies is $432.7 billion, a 56-month high, while the total number of existing loans is more than 31.8 million, its highest level in 54-months. Also, the total balance of auto loan originations year-to-date in June 2013 is 237.6 billion, an increase of nearly 15% from same time a year ago and the most new credit originated for that time period in more than eight years.
- Bank-issued credit card: At $93.3 billion, the total limit of new credit issued between January and June is a five-year high for that year-to-date period. It is also an increase of more than 68% over the recession low of $55.5 billion for the same time during 2010. The number of new loans year-to-date in June is 20.1 million, a five-year high and an increase of 6.3% from the same time a year earlier. Existing loans totaled more than 310 million, a 43-month high, while the total bank card credit limit is more than $2.4 trillion, a 43-month high.
- Retail-issued credit card: At $34.2 billion, the total limit of new credit issued through June of 2013 rose nearly 33% over the recession low of $25.8 billion for the first six months of 2010. Between January and June 2013, roughly 18 million new loans were issued--the highest since 2008 and an increase of more than 7% over the same period last year. Year-to-date lending through June to subprime credit borrowers (with Equifax Risk scores below 660,) increased 15% over the period a year ago, and 5.9 million loans were originated, the highest in 5 years. Existing loans total more than 180 million, with the total retail card credit limit at nearly $350 billion.
- Home finance: The total balance of first mortgages in August is $7.7 trillion, a decrease of 1.2% from same time a year ago. The total balance of first mortgage severe delinquencies (90-days past due or in foreclosure) is $300 billion, a decrease of more than 28% from same time a year ago and a five-year low. August's home equity revolving loans balance totaled $500.4 billion, a 7.4% decrease from that time a year earlier and a five-year low. August loans outstanding totaled 10.5 million, a five-year low. Severely delinquent home equity revolving loans for the month is3 is less than $9 billion, a 25% decrease from a year earlier and also a five-year low. The total balance of home equity installment loans is $136.7 billion, a 4.2% decrease from a year ago, while the total number of loans outstanding is four million, a five-year low.