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Banker Sentiment Up, Credit Gap Down

We just wrapped up our latest quarterly survey of U.S. bank risk professionals. As a first in our survey’s three-year history, respondents are expecting something of an equilibrium in the consumer “credit gap” – 60% expect the amount of credit requested by consumers and the amount of credit extended by lenders to increase over the next six months. It's the first time expectations for the growth of credit demand did not exceed those for the growth of credit supply.

This outlook is quite different than what we see in Europe. The results of our latest survey of European bankers, which we’ll release next week, show that 40% think the amount of credit requested will rise, while just 20% think more credit will be made available.

Our U.S. survey also found that 61% of bankers expect the average credit card balance to increase during the next six months. And in a relatively positive sign, just 26% of respondents expect delinquencies on credit cards to increase.

These survey results say quite a bit about the psychology of borrowers and lenders. After years of caution, lenders are clearly in growth mode. That’s not a big secret. But I find the borrower side of the equation more intriguing. It appears that borrowers are beginning to shed the frugal habits that helped them deleverage to the tune of more than a trillion dollars since 2008. 

In addition, most survey respondents expect to see decreases in delinquencies on nearly every type of loan.


Once again, student loans were the sole area of pessimism. This is the seventh consecutive quarter in which there was significant concern about delinquencies on student loans.

A few other results jumped out at me:

  • Nearly 52% of respondents expect requests for credit line increase to rise, while 3.5% expect such requests to fall – the smallest number ever seen in this survey.
  • Just 7% expect credit card balances to decline, the lowest figure in the history of the survey.
  • 47% expect mortgage delinquencies to decline, which is the most optimistic result in the survey’s history.

Get the full survey report.

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