Are US bankers embracing the economic recovery? According to our latest quarterly survey of 200+ US risk officers, it certainly looks that way. This sentiment is in sharp contrast to the grim forecast expressed in our recent survey of European risk managers.
The US survey showed that risk managers expect loan delinquencies to drop and credit availability to expand (more on the latter in my next post). Not only were these results much more optimistic than last quarter’s, but fewer lenders in the latest survey expect delinquencies to rise on home, car and small business loans than at any time since we launched the survey two years ago.
The number of respondents expecting mortgage delinquencies to rise during the next six months was 12 percentage points lower than last quarter—dropping from 47 to 35%. The survey found 28% of respondents expect delinquencies on small business loans to increase, down 11 percentage points from last quarter. And 20% of respondents expect delinquencies on car loans to increase, down 13 percentage points.
With regard to credit cards, 32% of respondents expect delinquencies to increase. That is seven percentage points lower than last quarter, and it is the lowest figure since the second quarter of 2011.
As unemployment falls, even modestly, and four years of deleveraging begin to pay dividends, it looks like US lenders are feeling some optimism. We’re certainly not out of the woods— foreclosures are still a real concern, and jobs are coming back slowly. But if we can avoid major bumps in the road, such as a spillover effect from the Eurozone crisis, I have every reason to believe we’ll continue to see delinquencies drop.
One area that remains a concern is student lending, with 51% of survey respondents expecting delinquencies to rise. While it's 16 percentage points lower than last quarter, it is still the second-highest level recorded in our survey.
Get full survey results.