ATLANTA-Total consumer debt has nearly returned to pre-recession levels, including a 32% growth among credit card originations, according to the newly released Equifax National Credit Trends Report. But home equity lending continues to slide.
Equifax said credit card origination volumes remain strong, with the total number of new bank credit cards opened from January-August 2011 representing a 25% increase over the same period in 2010. Retail credit card origination growth continues to rebound, too, the company said, after bottoming out in 2010, and is up more than 7% during that period. The holidays should drive another spike in origination volume. The amount of total new credit issued still lags behind pre-recession levels by a full 45%.
• In 2006-2007, the number of total new home equity lines exceeded the number of total new bank credit card originations. This has now reversed, with total new bank credit cards now exceeding total new home equity lines for January-August 2011.
• Consumer finance has been slow to recover to pre-recession levels as well, demonstrated by the average consumer finance amount for August 2011 ($2.902) at its lowest in six years (versus the highest in August 2006 of $4.133), Equifax reported.
"On the whole, the lending industry is experiencing dramatically mixed results depending on sector," said Michael Koukounas, senior vice president of special client services for Equifax. "Bank credit card and auto lending, in particular, have consistently performed strongly this year, providing some ground for optimism, but the severe retraction within home equity lending continues to underscore the level of impact that declining home values are having on the economy."
• August 2011 total new loan amounts ($34.4 billion) is roughly equal to pre-recession August 2007 total new loan amounts ($34.5 billion).
Average Student Loan Decreases
• While the number of loans originated in the January-August timeframe has remained fairly consistent over the past six years (for example, 9.5 million in 2006, 9.5 million in 2009 and 9.5 million in 2011), the average student loan amount has decreased significantly during that same timeframe ($5,934 in 2006 versus $3,631 in 2011), Equifax said.
• The industry has seen a dramatic rise in the number of bank credit cards issued to subprime (defined in the study as those with Equifax credit scores lower than 600) borrowers, with a 56% increase in January-August 2011 originations over January-August 2010 originations.
Equifax's national analysis is sourced from data on more than 585 million consumers and 81 million businesses worldwide.
