Quote of the Month:
"...borrowers in states with defaulter-friendly [foreclosure] laws face a reduced supply of mortage credit."
| Forecasts & Statistics |
| Product Trends |
| Industry Trends |
| Issue Archive |
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| Economic Outlook |
| Things are looking up, although you wouldn't know it listening to the politicians as the 2004 presidential race begins to warm. A recent (May-June 2003) edition of The Pocket Chartroom, the excellent economic newsletter published by the economic research unit of Goldman Sachs, adopts a cautiously optimistic outlook. |
| Declines in Some Types of Delinquencies |
| The latest round-up of delinquency statistics offers some mildly encouraging news. The American Bankers Association Consumer Credit Delinquency Bulletin found that the percentage of credit card accounts issued by its member banks that were past due in the first quarter 2003 was unchanged from the fourth quarter 2002.... The good news was that it did not worsen, given rising unemployment. |
| Personal Bankruptcies Refuse to Slow |
| Lenders hoping for a respite in personal bankruptcy filings continue to be disappointed. As of the end of the 25th week of 2003 (through June 21st) personal bankruptcy filings in the U.S. were up 9.7% from the same period one year earlier. |
| Growth of Domestic Nonfinancial Business Debt |
| A recent report by the Federal Reserve focuses on nonfinancial business debt. This measure excludes debt owed by commercial banks, finance companies and other financial institutions. The data show that total debt of households rose at an annual rate of 10.0 percent in the first quarter of 2003, down slightly from the peak annualized growth rate of 10.9 percent in the fourth quarter of 2002. |
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| Credit Card Solicitations |
| Mail Monitor® Tracking Service reported that annual U.S. credit card acquisition mailings declined to 4.89 billion in 2002 from the record high of just over 5 billion offers registered in 2001. The 2% change marked the first decrease in mailings since 1999, while the trend in response rates was virtually unchanged at 0.5%-remaining at or below 1 percent since 1999. |
| The Co-Branding Boom |
| Co-branding of credit cards began in the United States in 1986. In that year, Continental Airlines and the Marine Midland Bank launched the first co-branding program. Later, General Motors and Shell launched a massive co-branding program that is still among one of the largest in the market today. |
| $1 Trillion on Plastic |
| Visa, U.S.A. announced in June that transaction volume across all of its card products (credit, debit, prepaid) topped $1 trillion during the 12 months ending March 31, 2003. Visa claimed that this total exceeded the combined dollar transactions on MasterCard, American Express and Discover cards during the same period. |
| Prepaid Debit Cards |
| There is no need for you to carry cash with you the next time that you travel to Hungary. Instead, you can carry a Maestro Pre-paid provided by OTP bank. |
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| Credit Counseling |
| Although credit counseling has not yet attracted much legislative attention, a recently published study suggests that this may change as a new breed of "non-profit" credit-counseling agencies has emerged that may be counter-productive for consumers. The National Consumer Law Center (NCL) and the Consumers Federation of America (CFA) have released an extensive study, Credit Counseling in Crisis. |
| Hispanics Increase Use of Debit Cards |
| MasterCard International has released a survey showing that Hispanics prefer to make payments with debit cards rather than cash or checks. Their preference appears to reflect convenience, safety and widespread acceptability. |
| Households Refinance Their Mortgages |
| Home mortgage and home equity credit is the cheapest form of consumer credit available (except parents). Why? Over the period from 2000 through January 2003, the average effective rate on 30-year fixed rate home mortgages has ranged from 7.52 percent (average: 2000) to 6.12 percent in January 2003. |
| Credit Reporting |
| The recently issued annual report of Equifax suggests that the growth in consumer credit also triggered growth in credit reporting. Consolidated data for the past three years are shown in accompanying table. |
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| Homeowner Protection at the Expense of Low-Priced Mortgage Credit? |
| A Federal Reserve Finance and Economic Discussion Series working paper released in May titled "Foreclosing on Opportunity: State Laws and Mortgage Credit," investigates the relationship between state-level foreclosure laws and the dollar amount of accepted residential mortgage applications. |
| National Do-Not-Call List Triggers Huge Response |
| The activation on June 27, 2003 of a national Do-Not-Call registry maintained by the Federal Trade Commission triggered an enormous response from consumers. The listing service is intended to give consumers who are fed up with telemarketing calls an option to block the majority of such calls. |
| Florida Suit Threatens Subprime Mortgage Lending |
| A lawsuit filed in Florida in mid-June must seem like déjà vu to the subprime lending industry. The state Attorney General's office is suing a unit of Lehman Brothers for allegedly helping the now defunct First Alliance Mortgage Co in perpetuating unfair and deceptive trade practices in its dealings with mortgage borrowers in Florida. |