Equifax: New Credit in 2013 at Five-Year High
Auto loan origination activity this year is the strongest it has been for banks since 2006, with new credit generated during January and February totaling $141 billion.
ATLANTA — According to Equifax's latest National Consumer Credit Trends Report, new credit generated during January and February posted at $141 billion, the highest balance for that time period in five years. It also represents a more than 33 percent increase over recession lows of $94 billion originated between January and February 2010.
Year to date, student loans increased nearly 27 percent to $11.7 billion from February 2012 to February 2013, while home equity lines of credit increase nearly 16 percent to $12.4 billion in that same timeframe. Auto loans showed a more than 13 percent year-over-year increase, with new credit balances reach $69.6 billion.
"The rise in auto loans is reflecting the strong demand for new cars and light trucks, which increased almost 9 percent over the same time a year ago," said Equifax Chief Economist Amy Crews Cutts. "On a year-to-date basis through February, auto loan origination activity this year is the strongest it has been for banks since Equifax began tracking this information in 2006, totaling $35.6 billion, and the second strongest showing for non-bank auto financing companies at $34 billion.
Cutts said what’s driving demand is consumers wanting to replace their old, patched-up cars, and finance sources seem willing delve deeper into the credit spectrum to help. But she did offer a few words of caution as well.
"On a more cautionary note, student borrowing continues to increase rapidly, and well beyond just tuition increases as more and more people are attending colleges and professional training,” she said. “In the past, some students might have relied on their parents who would have funded tuition payments using home equity lines of credit, but the small volume of home equity lending that is occurring today, at a little over $12 billion, is not sufficient to cover those costs."
Other highlights from the most recent data include:
Auto:
The total number of new loans increased nearly 9 percent year over year. Year to date in February, the total number of loans increased from 3.2 million to 3.5 million, the highest in more than seven years.
By source, bank-funded auto loans increased more than 12 percent year over year in February, from $15.4 billion to $17.4 billion, while finance contracts purchased by auto finance companies increased less than 3 percent in that same time, from $17.4 billion to $17.9 billion.
Student Loans:
The total new credit balances for February increased nearly 29 percent (from $4 billion to $5.1 billion) on a year-over-year basis.
Home Equity Revolving
The total number of new loans year to date in February 2013 were 130,200, a year-over-year increase of more than 11 percent.
Year over year, the total balance of new credit increased more than 11 percent February, from $5.6 billion to $6.3 billion.
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