Consumers may be ready to take on more credit in the coming months, according to the latest quarterly report by FICO.
With income and spending edging upward, and the recession recovery slow and steady, 46% of bank risk professionals who took part in this survey are anticipating more demand for credit. Only 16% expected demand to decrease. In keeping with this upward trend, 53% of lenders believe that consumers will be racking up more debt in the final quarter of the year.
Generation X and Y likely borrowers
Half of risk managers believe that 30 somethings will be the ones borrowing more in the future. Nearly a quarter (22%) expect consumers in the 20 to 29 age range to be ready to take on more debt. Only 18% of respondents thought top borrowers would be in their forties.
Risk managers expect there to be enough loans to go around in the coming months, with 70% of respondents believing that the supply of small business loans and home mortgages will be in sync with demand.
Eighty percent expect that consumers looking to refinance their mortgage, increase credit lines, or take out car and student loans should find them available.
While most types of loans fared well with risk managers, student loans were a source of concern for nearly half — 49% believe that delinquencies on student loans will go up. Only 15% expected them to go down. This is not a new trend. In the last eight quarters respondents have been concerned about borrowers defaulting on student loans.
Credit card delinquency rates remain steady with 62% of survey takers expecting them to remain the same. Only 11% expected them to decline.
The general consensus on interest rates is that they will be going up over the next six months. Just 1% believed that they would be going down, which is an all-time low for the survey.
The Professional Risk Managers’ International Association (PRMIA), conducted this survey for FICO last month. They talked with 114 risk managers at banks throughout the U.S. and Canada.