Rise in Home Equity Loans Reported

Most types of consumer lending have increased significantly over the past year, even as potential mortgage borrowers continue to be frustrated by extremely tight credit.

The credit reporting firm Equifax reports across-the-board increases in most types of consumer credit, with double-digit increases among auto loans and credit cards. Perhaps most surprising of all is a significant rise in home equity loans, despite depressed property values and a decline in mortgage lending in general.The biggest increase was seen among auto loans, which showed a 23 rise in outstanding balances compared to one year ago, measured from March 2010 to March 2011. Newly issued credit cards were up 14 percent over the same period.By contrast, outstanding mortgage balances were down by 3.49 percent compared to last year. Foreclosures accounted for part of the decline, but slow lending combined with consumers gradually paying down debt was also a factor, according to an Equifax spokesperson.In contrast to the overall mortgage lending, home equity lending actually increased by 9 percent over the past year, in terms of outstanding balances. The reasons for the increase, at a time when home values have remained largely stagnant and mortgage credit remains tight, are unclear. No explanation for the seemingly counter-intuitive increase was provided, although the trend is increasingly toward borrowers with high credit scores.Total available credit is currently at about half of its pre-recession levels in 2006 levels, although it appears to be steadily increasing, according to the company. New credit issues in 2011 totals $51 billion so far, compared to $45 billion at this same point in 2010, a 13 percent increase.On credit cards, the company reports that consumers are increasingly paying their bills on time and paying down existing debt, which is resulting in a general increase in credit risk scores nationally.Equifax is one of the three major credit reporting firms lenders turn to for credit scores lenders use to make decisions about consumer loans. Its monthly credit report is based on data from over 585 million consumers and 81 million businesses worldwide.