The US consumer lending market saw only slight current value growth in outstanding balance and gross lending terms over 2007-2012 as a whole. This was due to the impact of the economic downturn in the middle of that period, which resulted in decline in both these areas in 2008 and 2009.
Over recent times there has been a slight recovery but many consumers continued to seek to deleverage, reducing their debts and increasing their savings. In addition, lending conditions remained tight for many products at the end of 2012, as lenders sought to minimise their risks.
There was strong growth for auto lending and education lending in gross lending terms towards the end of 2012, with this rising concerns over the sustainability of these products. Auto lending was boosted by the entry of major auto manufacturers such as General Motors' subsidiary GM Financial and by the availability of low-interest long-term loans.
The availability of loans covering 72 or even 96 months however resulted in concerns that these products would depress future auto purchases and see the majority of customers enter negative equity. Education lending meanwhile saw striking growth due to rising tuition fees and a lack of checks and limits on borrowing.
The leading retail banks JP Morgan Chase and Bank of America continued to lead the US consumer lending market. These banks benefit from their large outlet volume and strong internet banking presence, along with a trusted reputation.
There were however signs of smaller players gaining share in some areas, particularly mortgages/housing. While many of the larger banks continued to impose strict lending restrictions, smaller players such as Guaranteed Rate gained share by offering lower prices and rapid processing times.
There will be a mixed performance for US consumer lending over the next five years, with consumers continuing to deleverage where possible. This trend will result in ongoing gross lending decline in durables lending and home lending and subdued growth for "other" personal lending and mortgages/housing. However, many households will find that they are reliant on consumer lending due to ongoing financial pressures.
For more information on the US consumer lending market, see the latest research: US Consumer Lending Market
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