Home Equity Lending Increases

By:: Peter King | July 05, 2011

Home equity lending has risen for the first time in five years, according to the credit reporting firm Equifax, while credit card and auto lending has risen as well.

New home equity loans increased by 6.6 percent over the past year, the company reported, the first annual increase since 2006. However, the average amount of individual loans is smaller than before, a reflection of the overall decline in home values nationwide.

Meanwhile, auto loans are up more than 21 percent compared to the previous year, while available bank card credit – from newly issued credit cards and higher debt limits on existing ones – is up 35 percent over the previous year.

"Despite concerns of the economy relapsing, several current metrics indicate the credit cycle is stabilizing - even growing somewhat as consumer payment behavior improves," said Michael Koukounas, Equifax Senior Vice President of Client Services.

Consumer credit scores are rising, according to the report, with the average Equifax Risk Score reaching 695 in May. The Equifax score roughly corresponds to the more well-known FICO credit scoring system, with a maximum score of 850 under both systems.

New consumer credit finance limits are up for the first time since 2007, showing a 1.5 percent increase. At the same time, overall consumer debt continues to decline as many borrowers seek to strengthen their finances, dropping to a total $11.3 trillion, down 8.7 percent from 12.4 trillion in October 2008.

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