CCR World Magazine


You are here  :Home arrow News arrow Rising Consumer Delinquencies and Persistent Wealth Gap Foreseen in North America: FICO Survey
Contact Us Newsletter Signup RSS Feeds

Latest News Headlines

Headlines

 
Commercial Credit News

Headlines

 
Rising Consumer Delinquencies and Persistent Wealth Gap Foreseen in North America: FICO Survey Print E-mail
Thursday, 22 January 2015

SAN JOSE, Calif. — January 22, 2015 — The combination of growing consumer loan delinquencies and a troublesome wealth gap could weigh on the economy in 2015, according to bank risk officers in the U.S. and Canada surveyed by FICO, the predictive analytics and decision management software company. In the survey, 42 percent of respondents expected loan delinquencies to rise in the next six months, versus 11 percent who expected delinquencies to decline.

In addition, nearly 74 percent of those surveyed agreed that “the wealth gap poses a risk to the financial system in North America.” When asked about the impact of the wealth gap on consumer borrowing, 83 percent said it has a negative impact on consumer credit quality. Furthermore, 24 percent felt the wealth gap had caused their institutions to change their underwriting standards.
 
“It is clear bankers are concerned about the wealth gap,” said Dr. Andrew Jennings, FICO’s chief analytics officer. “It is a macroeconomic issue that can have a profound effect on the quality, accessibility and risk associated with consumer credit. Concern among bankers about the risk posed by the wealth gap increased by 12 percentage points over our last survey.”
 
Credit Spigot Still Open

Regardless of the potential growth of consumer delinquencies, 57 percent of those polled expected credit card debt to rise in the first half of 2015. Respondents also expected consumer demand for credit to remain strong, with 58 percent of bankers surveyed expecting the amount of new credit requested by consumers to increase. Just 6 percent expected a decrease.
 
Less Pessimism for Student Lending

Among those polled, 44 percent expected delinquencies on student loans to increase over the next six months. This is the second consecutive quarter in which less than half of those surveyed expected the student loan situation to worsen. In FICO’s last survey, 41 percent expected delinquencies on student loans to worsen.
 
“While I wouldn’t characterise these results as optimistic, they are the two least pessimistic results we’ve seen on the topic of student loans in the four-year history of our survey,” said Jennings. “It reflects the improvement we saw in the job market in 2014. While there is still significant concern about student loan defaults, lenders recognise that jobs are becoming a bit easier to find.”
 
A detailed report of FICO’s quarterly survey is available at https://www.prmia.org/sites/default/files/references/Fico4thQuarter2014Final.pdf. The survey included responses from 148 risk managers at banks throughout the U.S. and Canada in December 2014. The Professional Risk Managers’ International Association (PRMIA) conducted the survey on behalf of FICO. PRMIA and FICO express special thanks to Columbia Business School’s Center for Decision Sciences for its assistance in analysing the survey results.
 

 

The CCR World App

 

Read CCR World as an App on your iPad or iPhone.
Simply click on this link (opens iTunes as an external link) to see the CCR World iTunes Preview and download to receive a free two-week trial or go to iTunes or the App Store and search for "CCR World".

CCR Magazine


Want to know more about the UK credit scene? Then take a look at our sister magazine, CCR, the leading UK publication for senior credit industry executives.

Find out more

CCR World newswire

Sign up to our E-Newsletter and E-Alerts.

subscribe

Read The Magazine - FREE ONLINE!

CCR World is the premier magazine for consumer and commercial credit professionals. It provides an independent voice to the global industry, breaking news stories and running in-depth features.

It is FREE to read online, so click here to read the current edition online.

(If you have not registered already, you will just need to do so to read all the news and analysis).

GTS Media Ltd
81 Cambridge Road
Southend-on-Sea
Essex
SS1 1EP

Registered in England No: 05483197