While some lenders and industry experts have been warning about any actions that may tighten the credit markets, lending is on a meteoric rise, with credit card limits and mortgage originations posting double-digit gains year over year.
The newest data from the Experian-Oliver Wyman Market Intelligence Reports and Experian’s IntelliView tool show that the years of the credit crunch are becoming a distant memory, with more consumers getting access to home loans and larger credit lines.
From the first quarter of 2012 to the first quarter of 2013, mortgage origination volume grew 16% and bankcard limits increased 20%. This is the eighth quarter in a row that mortgage originations have grown, marking a general upswing in the housing market as a whole.
“This year is off to a solid start given continued upward trends in origination activity,’’ said Linda Haran, director of product management and strategy for Experian Decision Analytics. “With loan delinquency continuing to show exceptional performance, combined with the growth in originations over the past year, we expect to see a strong remainder of the year, and an improving economy can keep this performance going.”
The increase in bankcard limits can be partially attributed to consumers with the highest credit scores on the market. Significant year-over-year growth also occurred within the near-prime segment of borrowers (42%), while prime consumers saw 30% growth.
“There is clearly opportunity in the near-prime segment, and lenders are definitely starting to loosen their criteria to acquire some bankcard growth,” said Haran. “We have always felt that near-prime consumers were ready to take on a little more debt than was being extended to them.”
The growth of bankcard limits to near-prime consumers should be good news for borrowers who are rebuilding their credit following the Great Recession. The opening up of credit means lenders are more apt to reach out to borrowers that have, for the most part, been shut out from record-low mortgage rates.
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