The consumer borrowing in July rose more than predicted in the US as non-revolving loans, including auto credits, grew the most in the past three years.
A report from the Federal Reserve in Washington showed that there was a $26 billion increase in credit, followed by an $18.8 billion advance in July, more than previously estimated. Non-revolving loans, which include college tuitions and auto credits, climbed $20.6 billion, the biggest growth since July 2011. Credit-card lending rose for a fifth straight month in 2014.
Households have become more confident to take on debt due to a stronger job market and rising home values and they are now investing in items as big as motor vehicles. Banks are also becoming more open to lending, which encourages consumers to boost their spending, which represents the biggest part of the economy.
Matt Schulz, senior industry analyst at CreditCards.com from Austin, Texas, says that “People are clearly starting to feel more confident, and we’re also probably seeing some pent-up demand. As long as you get that slow and steady economic growth, it’s reasonable to think that these numbers will continue to grow”
According to data from Ward’s Automotive Group, the credit gain probably extended into August as the U.S. auto demand accelerated. Motor vehicle sales rapidly grew last month to a 17.5 million annualized rate, the strongest since the beginning of 2006.
By Gabriela Florea