Consumer demand for credit increases
Demand at highest level since 2007
Consumer credit demand increased significantly on a yearly basis in the second quarter (Q2) of 2012, TransUnion said in a recent report.
According to TransUnion’s Total Inquiry Index (TII), consumer credit demand rose 21.4 percent year-over-year in Q2 2012. The increase put the TTI at its highest level since the third quarter (Q3) of 2007 – before the recession began.
“The increase in consumer-initiated inquiries indicates stronger consumer demand for credit, and may be a signal that consumers are beginning to increase their spending on discretionary items and larger-ticket purchases, reflecting stronger consumer sentiment and confidence toward the U.S. economy,” Charlie Wise, director of research and consulting in TransUnion’s financial services business unit, said in a statement.
“Consumers have stepped up their borrowing over the past year, particularly in bankcards and auto loans,” Wise said.
However, despite increasing demand and increasing balances, delinquency rates have not risen in unison.
“New card and auto loan originations have both grown over the past year, and average balances per consumer for both these loan types increased between Q2 2011 and Q2 2012,” Wise said. “Despite those increases, we are pleased to see that delinquency rates have remained flat or declined.”
In Q2, all 50 U.S. states experienced a decrease in credit risk, TransUnion said, with only the District of Columbia seeing an increase. This is a marked improvement from the previous quarter (Q1 2012), when 31 states plus the District of Columbia all saw quarterly increases.