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Is US Consumer Credit Availability About to Expand?

Lately on the blog, I’ve been examining the results of our latest quarterly survey of US bank risk managers. One item of note was regarding the outlook for credit availability.  In a positive sign, our survey found that lenders expected the supply of credit to satisfy demand for all types of consumer loans in the second half of this year. It’s a change from last quarter when survey respondents expected the credit supply for residential mortgages to fall short of demand.

When asked whether credit supply would meet or exceed demand for credit cards over the next six months, 77% of survey respondents said yes. For car loans, the figure was 82%. For residential mortgages, 55% of respondents expected supply to meet or exceed demand. For small business loans, the figure was 56%, and for student loans, 61%.


While the findings present a sharp contrast to the pessimism expressed in our European risk survey, in the US, this is hopeful news. I was particularly struck by the numbers for residential mortgages and small business loans. Those are two areas where credit has been tight over the past few years. If lenders really are ready to extend more credit to those borrowers, it could provide a stimulus for the US economy.

Also noteworthy, more than 35% of survey respondents expect the approval rate for consumer credit applications to increase over the next six months. That’s compared to only 19% that expect the approval rate to decline. Moreover, 45% of those surveyed expect the total amount of consumer credit extended by lenders to increase during the next two quarters—nearly triple the percentage of respondents who expected a decrease.

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