There are more signs of an improving credit landscape heading into the second quarter, according to consumer data from Equifax's March National Consumer Credit Trends Report. Home finance remains an exception to the boost.

U.S. consumer debt fell to $10.9 trillion by the first quarter ended March 31, down more than 11% from its peak of $12.4 trillion in Oct. 2008.

Credit write-offs are lower by 50% from March 2009, when banks charged off a total of $39.7 billion – excluding home finance. In March, the number had dropped to $20 billion, reflecting stronger consumer finances.

During the recession, the average size of delinquencies rapidly increased as dollar rates outpaced total number of delinquent accounts, a trend that has since reversed in auto, bank card, consumer finance and retail card categories.

More than 72% of total delinquencies are still linked to loans originated between 2005 and 2007, which comprise 36% of balances outstanding, while loans opened in 2009 and later have performed much better. Only 12.6% of delinquent accounts are from credit lines or loans opened in or after 2009.

New non-mortgage credit balances continue to increase. New auto, bank and retail cards, consumer finance, home equity and student loan credit rose to $61 billion in January 2012, an 11% increase over the same time a year ago when new accounts totaled $55 billion.

Some key findings from Equifax's latest data include:


• Auto loan and lease balances rose to a post-recession high of $727.5 billion in March.
• Auto finance loans totaled more than $380 billion - the highest since Q3 2009.Delinquency rates among all auto loans are at their lowest point in five years.
• Auto sales are rising fast and new auto loans to pay for them are also growing. New auto loans obtained from banks in January rose to 728,000 accounts, up from 630,000 a year ago, while new auto loans from finance companies grew to 753,000 accounts from last January's 735,500.

Bankcard and Consumer Finance

• Outstanding bankcard balances in March stood at $532.8 billion, an $8 billion decrease from the previous year; however this is a modest drop compared to the decrease of more than $54 billion seen from 2010-2011.

• In March, delinquencies and write-offs among existing bankcards were well below pre-recession levels and the lowest in five years.
• Available credit, the difference between credit limits and balances, is climbing and in March 2010 reached nearly $1.9 trillion, the highest since Sept. 2009.
• New consumer finance loan volume totaled 1.4 million new accounts in January, an increase of 8% over the same month a year ago.
• Consumer finance loans taken out in January summed to $4.3 billion, a 12.1% increase over January 2011 volumes.

Student Loans

• While still elevated from previous years, write-offs decreased from year-to-year, the first reverse in the trend in six years.
• The average amount per new loan is currently $4,548, down nearly 20% from Jan. 2011 ($5,572) the first decline in three years.
• Similarly, loan amount per student dropped 12% to $6,917 versus the same time last year.

• Borrowers aged 30-39 year old took out 17% of the number of new student loans in January, equating to nearly 15 million loans, however their loans represent 24% of the total dollar amount of new student loans opened in January (approximately $157 billion).
• Conversely, the 23-and-under age range took out nearly twice as many loans (just over 30 million), yet account for nearly the same total dollar amount.

"Lower delinquency rates and fewer write-offs coupled with the growth of new credit across multiple sectors clearly outlines the increased activity of consumers and their renewed faith in the marketplace heading into the second quarter," says Equifax Chief Economist Amy Crews Cutts. "Aside from Home finance, which will require a longer recovery time due to long foreclosure process, the data reflects the improving U.S. economy as consumers explore new financial options and exercise due diligence in repaying their existing debts."

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry