Nowadays non-revolving loans are very popular and the amount of borrowing has significantly increased in July comparing to same periods in the three previous years. Non-revolving loans include auto loans and loans for tuition. The number of transactions is even more than it was forecasted in June.
Washington’s Federal Reserve reported today that the amount of non-revolving loans increased up to $26 billion. In June such number was estimated near $6 billion. The gain in $20 billion is unprecedented since 2011. By the way, the consumption of credit cards, as well as emergency money loans services, got higher too.
Reasons for the Boom in the Credit Market
Improvement of the situation in the labor market as well as at the real estate market pushes people to buy cars and some other expensive machinery. According to the research made by Experian Automotive, such state of affairs may be explained by auto loans terms increase.
It is also true that banks suggest their funds to consumers more willingly which involve many people into taking loans. Economic growth has also influenced the situation positively because people are more confident about the future and thus spend more.
Such big credit market increase took place in 2001 as the Fed informs. The gain increased from $14 billion to $23 billion despite economists ‘forecasts of $17,5 billion.
Transactions in the real estate market are not included in this report.
New cars are also demanded by consumers this summer, that is why auto loans applications have also increased. Ward’s Automotive Group informs that auto sales reached $17.5 million per year.
Loans taken from the federal government primarily for educational needs increased by $3 billion in July.
The usage of credit cards and installments loans reached the amount of $5 billion in July comparing to $1.8 billion in June.
According to the survey made on the 5th of August, the banks plan to extend their activity and to provide consumers with beneficial auto loans and credit cards programs.
There is no doubt that such situation in the financial market will spice up housing industry as well.