Bankers are increasingly optimistic about the financial health of their consumers, according to a quarterly survey of bank risk professionals conducted by Minneapolis-based credit score maker FICO. But the bankers surveyed still feel it will take some time for foreclosures to subside. They also say the small business lending environment continues to be challenging. The findings:
- 31 percent say credit card delinquencies will fall, while 30 percent predict a rise in delinquencies over the next six months. Guess we'll have to wait and see who wins this tug of war.
- nearly half the bankers surveyed expect Americans to increase their credit card balances over the next six months compared to 19 percent who predict balances will drop.
- 32 percent say car loan delinquencies will fall, while 21 percent say they expect a rise in delinquencies through year-end.
"Bankers tend to be a conservative group, so the fact that their positive outlook from Q1 carried over to Q2 is a good sign," Andrew Jennings, chief analytics officer at FICO said in a statement.
The outlook isn't so great for small businesses. According to the same bankers:
- 28 percent say small business loan delinquencies will decline, but 33 percent say they will rise. That's a reverse from last quarter. Many bankers also expect credit will remain tight.
- 18 percent expect mortgage delinquencies to fall, but 46 percent see a rise in delinquencies ahead.
Home equity lines are another area of concern, Jennings said. "This isn't surprising given the fact that average home equity in the U.S. has dropped from 61 percent in 2001 to 38 percent today," said Jennings. "With millions of homeowners under water on their mortgages, it is very hard to see the light at the end of the tunnel. It is likely to take years to work through all the troubled mortgages."
