A new report from credit reporting agency Equifax shows that American consumers are now more comfortable to add to their credit balances, may they be for mortgage loans or for credit cards. This follows a stark reduction in mortgage debt that took place in the aftermath of the great economic recession of the late 2000s.
The report stated that total outstanding balances of home loan mortgages and bank and retailer-issued cards had gone up for three straight months for the first time in over three years. On Equifax’s report, home loans do not just include first mortgages, but also home equity installments and home equity revolving balances; the agency’s statistics show that first mortgage balances went up from $7.7 billion in January 2013 to $7.9 billion in January 2014, making this increase of 2.5 percent the largest in over three years.
Total home equity balances, however, had dipped from $664.3 billion to $622.3 billion, a decrease of over 7 percent. In addition, first mortgage delinquencies were also down 22.8 percent year-over-year in January 2014, while home equity installment and home equity revolving delinquencies decreased by 22 percent and 10.6 percent respectively, also on a year-over-year basis.
Retail card balances, on the other hand, continued to trend upwards, while bank card balances, according to Equifax chief economist Amy Crews Cutts, are still on a downwards trend. Cutts said that this may be because consumers want to “compartmentalize large purchases or take advantage of special deals tied to cards offered by retailers.”
Some statistics that back up the general increase in credit card activity include a four-year high of 315 million outstanding loans for bank-issued cards, and 190 million outstanding loans for retail-issued cards, the latter being a 53-month high. New bank card and new retail card credit had also reached multi-year highs and increased by more than 10 percent on a year-over-year basis.