The number of consumers who are delinquent in making payments on all kinds of loans, from credit cards to mortgages, has declined over the last few months, and that has led many banks and retailers to expect a strong holiday season, according to a report from the Wall Street Journal. In addition, even long-term unemployment problems, of which there have been many, are not likely to have a significant impact on consumer credit going forward, since these borrowers have likely been washed out of the credit system already.
During a recent presentation, Bank of America CEO Brian Moynihan said his company, and other lenders, see these factors as signs the economy is improving for consumers, the report said. However, many major banks are still seeing their revenues hampered by the new governmental regulations, and therefore may continue to approach business practices cautiously.
Moynihan also said foreclosures and mortgage modifications are still a sticking point for many banks, the report noted. These processes will need to be improved for consumers, and that will take time. Until then, lending restrictions will likely remain higher than for other types of credit.
Consumers have been able to improve their credit in recent months by decreasing their reliance on credit cards to make ends meet, and are instead able to commit more in cash to other payments.
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