Risk professionals with many U.S banks have shown a great aversion to the health of the American consumer in general over the last few years. As the economy worsened, the lenders tightened their purse strings. FICO’s most recent quarterly survey shows a change in their aversion.
The touch of optimism is related to an anticipated slowing of delinquency rates. Fewer delinquencies allows banks to make more loans, in what is, hopefully, a positive cycle. Another positive sign is a closing of the ‘credit gap.’ Currently more people apply for credit than is given. That is nearing an equilibrium. As a sign of an increase in consumer confidence, credit card balances are expected to grow over the next six months and second chance car loans should be easier to get.
These are all great signs of an economic recovery, but caution should always be maintained. Not so much by lenders as by consumers. The economy can stall at any time. If you are mortgaged to the hilt and counting on your overtime, you could suffer a great deal.