Bankers expressed optimism that lending for small businesses would accelerate over the next six months in Fico’s quarterly survey of US bank risk professionals. By more than a two-to-one margin, respondents said that both the approval rate for small business loans and the total amount of credit extended to small businesses would increase rather than decrease, and more than half of all respondents predicted the overall supply of small business credit would meet demand.
The survey, conducted for Fico by the Professional Risk Managers’ International Association (PRMIA), found continued concern among bank risk professionals about the student debt crisis, and respondents said the supply of new home loans will barely keep pace with demand amid signs that the US housing market is beginning to rebound.
Consumer Credit: Returning to Normalcy
After several years of uncertainty in the consumer credit market, this was the second consecutive quarter in which the Fico survey found that bankers expected delinquency rates on every type of consumer loan except student loans to remain flat or decrease. The percentages of survey respondents who expected delinquency rates either to stay at their current levels or go down during the next six months were as follows:
- Credit cards: 67%.
- Car loans: 76%.
- Residential mortgages: 76%.
- Home equity lines of credit: 74%.
- Small business loans: 73%.
However, a majority of respondents (61%) expected delinquencies on student loans to increase. This is the fourth consecutive quarter that respondents have predicted a worsening of student loan delinquencies.
Credit Supply Expected to Expand
In another hopeful sign, for the second straight quarter, the majority of lenders expected the supply of credit to satisfy demand for all types of consumer loans. The percentages of respondents who expected the supply of consumer credit to meet or exceed demand during the next six months were as follows:
- Car loans: 76%.
- Credit cards: 72%
- Mortgage refinancing: 59%.
- Student loans: 58%.
- Small business loans: 53%.
Expectations for new mortgage financing were nearly evenly split, with 51% of respondents expecting an adequate credit supply and 49% expecting supply to fall short of demand.
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