After spending the last few years paying down debts, consumers appear ready to increase their borrowing again, lenders say.
In a survey of risk managers taken in the fourth quarter and released last week, 61% of respondents said they expect requests for home, car and other consumer loans to rise over the next six months. In the same survey taken three months earlier, just 48% of risk managers said that loan requests would increase in the subsequent months.
Risk managers also predict that an ample supply of credit would be available in the next six months, particularly for car and credit-card loans. Seventy-four percent of respondents said that available loans for cars would meet or exceed demand while 71% said the credit-card lenders would meet or exceed demand, according to the survey, which was sponsored by Fico and conducted by the Professional Risk Managers' International Association.
"These results indicate that 2013 could be the year that Americans begin to embrace credit again, after the considerable deleveraging we've seen since 2008," said Andrew Jennings, the chief analytics officer at Fico. "With both the job market and real estate sector showing signs of life, American consumers may be willing to fund their lifestyles by taking on more debt. And it appears that banks are willing to oblige."
The improving economy also means that more existing borrowers will be able to keep up with their monthly payments, risk managers said. Less than 30% of respondents predict that mortgage delinquencies will rise in the next six months, while roughly half expect to see no increase in delinquencies on small-business and car loans.
One area of concern, however, is student lending. Nearly half of all respondents expect student-loan delinquencies to increase slightly in the coming months and 11% predict that such delinquencies will rise substantially. Risk managers cite soaring education costs as the primary reason why graduates — many of which are being paid entry-level salaries — will struggle to repay student debt.