Consumer borrowing in the U.S. rose more than forecast in July as non-revolving loans including those for cars climbed by the most in three years.

The $26 billion increase in credit exceeded the highest forecast in a Bloomberg survey and followed an $18.8 billion advance in June that was more than previously estimated, the Federal Reserve reported today in Washington. Non-revolving loans, which include borrowing for cars and college tuition, climbed $20.6 billion, the biggest gain since July 2011. Credit- card lending rose for a fifth straight month.

A stronger job market and rising home values are giving households the confidence to take on debt to buy big-ticket items such as motor vehicles. Banks are also becoming more willing to lend, which could encourage more consumers to boost their spending, which makes up the biggest part of the economy.

"More people are employed, the quality of jobs is slowly improving, so people are just more comfortable with their prospects," Terry Sheehan, an economist at Stone & McCarthy Research Associates in Princeton, New Jersey, said before the report. "Consumers are cautiously making more use of credit right now."

The July increase exceeded the $17.4 billion median forecast in the Bloomberg survey. Estimates of the 35 economists ranged from increases of $14 billion to $23 billion.

The report doesn't track mortgages, home-equity lines of credit and other debt secured by real estate.

The gain in credit probably extended into August as demand for cars accelerated. Motor vehicle sales soared last month to a 17.5 million annualized rate, the strongest since the beginning of 2006, according to data from Ward's Automotive Group.

Federal government lending to consumers, made up mostly of educational loans, increased $3.1 billion in July from the prior month before adjusting for seasonal variations.

Revolving credit, which includes credit-card balances, rose $5.4 billion after a $1.8 billion June increase, today's figures showed. Credit card use has increased five straight months, the longest such stretch since the period ended April 2008.

Some banks are showing a greater willingness to extend credit cards and finance car purchases amid growing demand and rising competition, according to a quarterly Fed survey of senior loan officers released Aug. 4.

Better access to credit will help spur gains in the housing industry as well.

"We continue to hear some positive comments about some loosening of underwriting guidelines," Larry Sorsby, chief financial officer at Hovnanian Enterprises Inc., a Red Bank, New Jersey-based homebuilder, said on a Sept. 4 earnings call. Even so, "I would say it's really around the edges and fringe and hasn't had much significant impact on underwriting the entry level buyer at this stage."

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