Credit Trends Among U.S. Consumers Point to End of Housing Downturn

Consumer credit data suggests spending will increase and the housing market will begin to emerge from its slump this year, according to ""Equifax"":http://www.equifax.com and ""Moody's Analytics"":http://www.economy.com.
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Statistical analysis applied by ""CreditForecast.com"":http://www.creditforecast.com, a joint product of Equifax and Moody's, to new performance data for consumer credit supports the forecast issued by the credit bureau and ratings agency.

Both companies note that as key market data align with pre-recession totals, consumers should anticipate steady economic growth for major credit sectors.

Looking across the full spectrum of consumer credit, Equifax and Moody's found that delinquency rates for auto, bankcard, and consumer finance are back to pre-

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recession levels. These sectors are expected to contribute to the U.S. economy's nascent recovery.

The home mortgage lending sector continues to see the highest percentage of delinquencies, the companies' report notes, even with outstanding mortgage balances (including first liens and home equity lines and loans) having declined by $1 trillion since 2008 and continuing to drop.

Even so, mortgage rates are at all-time lows, with refinance activity at high levels and offsetting diminished demand for new loan originations, according to Equifax and Moody's.

The companies also note that tighter lending guidelines are reflected in loans made to the prime risk segment (those borrowers with an Equifax score of 700 or above). Consumers that fit the bill of a prime risk now account for more than 80 percent of all new mortgage originations.

""After spending recent years in the financial doldrums, U.S. consumers are poised to make a comeback in 2012,"" according to Amy Crews Cutts, chief economist for Equifax.

She says the most promising indicators are showing up in consumer spending and the auto financing sector, but even the housing market is exhibiting incremental progress that points to increased traction in the coming months.