Bankers See Rising Delinquency
According to a recent report from Fitch Ratings, credit card delinquencies fell to a 15-month low in July. Despite this positive trend, a recent FICO survey of bankers reports ongoing pessimism about delinquency rates for most financial products.
Among respondents, 53% expect a rise in delinquencies for home mortgages, 42% expect a rise for credit cards, 47% expect a rise for small business loans, and 49% expect a rise for student loans. A much smaller percentage expect to see a decrease in delinquencies.
The impact of increasing delinquencies has a negative effect on all credit provision. The “credit gap” between demand and the number of credit worthy customers is expected to continue expanding, especially as clients’ credit histories worsen. Another recent FICO survey shows 73% of bankers expect applications for credit to increase or stay the same, while only 25% expect approvals to increase. In fact, 46% expect approval criteria to get stricter.
ACCION Chicago continues to expand its capacity to provide credit to small businesses. Although ACCION saw increasing delinquencies at the beginning of the year, rates have shown a continuing downward trend through the second and third quarters. With its portfolio performing well, ACCION plans to continue expanding credit for small businesses in the coming months and years.
According to FICO banking analytics, there is one positive in the results of its surveys. The percentage of bankers with negative outlooks is slightly less than in the second quarter of 2010.