Financial institutions reported decreased bank lending in China in March; according to a report from the People's Bank of China, financial institutions issued new loans of 1.02 trillion yuan ($148 billion) in March, a decrease from CNY1.17 trillion ($170 billion) in February; nonbank lending increased in March, with total social financing reported at CNY2.12 trillion ($308 billion), an increase from CNY1.15 trillion ($167 billion) in February. Source
The National Consumer Assistance Plan from the three major US credit bureaus was created following a 2015 settlement and seeks to improve credit reporting accuracy; it will exclude tax liens and civil judgments that do not conform to reporting agency standards; exclusion of these two items is likely to help consumers receive a slight increase in their credit score; medical debt is also being excluded until 180 days after the delinquency; VantageScore and other credit agencies are also taking some new factors into consideration when calculating credit scores including trended data and number of accounts. Source
Non-bank lenders like OnDeck, CAN Capital and Kabbage have originated billions in small business loans, but some fear they might be repeating the mistakes made by banks with subprime mortgages; recent overdue payments on securitizations are raising questions about predatory lending and marketing tactics; the small business market is significantly smaller than the mortgage market, and so the risk of another global financial crisis is small. Source
Tuesday's 3.2% GDP growth rate report is an indication of expanding economic growth in the US which increases the probability of a rate hike from the Federal Reserve in December; a continued positive trend in economic growth is also likely to lead to five interest rate increases through 2018; consumer spending appears to be the leading catalyst for current economic growth and the source cautions that it could lead to problems for the marketplace lending credit market; consumer spending has been driven by increased credit balances but as rates rise, risks from these borrowers are also likely to increase which could affect platform defaults and securitization portfolios with the greatest risks in unsecured loans. Source
According to a paper by the China Banking Regulatory Commission (CBRC) blockchain technology should be adopted by China’s secondary loan market; as CoinDesk reports the paper came out of a trip made by the regulator to their counterparts in the UK and France; European banks are putting together a program to test blockchain technology for the issuance of syndicated loans; the CBRC also considers blockchain technology to potentially be helpful for automating compliance. Source.
The Bank of England's Financial Policy Committee discussed concerns over consumer credit defaults in its recently released minutes; credit card, bank loan and car loan borrowing has increased and the Bank is also concerned about prolonged interest free offers and eased underwriting standards; stress testing has revealed potential losses for banks of 18.5 billion British pounds ($23 billion) on their consumer credit loans and 11.8 billion British pounds ($15 billion) on their mortgage loans; as the Bank monitors consumer lending, it is likely new constraints will be required to manage risks in the new economic environment. Source
The Federal Open Market Committee raised its target for the federal funds rate to 0.50% to 0.75% at its December meeting; Fed officials also signaled a more aggressive approach for rate increases in 2017 with projections showing the potential for three more rate increases next year; improvements in the labor market, positive GDP growth and stable inflation were key market factors for the rate increase. Source
A quarterly report from the New York Federal Reserve says household debt has reached its highest level since 2008 at $12.58 trillion; household debt increased $226 billion in the fourth quarter of 2016; home and auto loans represent the majority of the debt; despite the increase, bankruptcies and foreclosures for the fourth quarter reached an 18-year low indicating consumers are capable of managing the added debt. Source
According to data from the Bank of England, unsecured consumer credit in the UK increased to 1.9 billion British pounds ($2.34 billion) in November and reported its highest level since March 2005; experts believe UK consumers have been increasing debt to take advantage of the market's low interest rates; P2P lenders have benefited from the increased demand for debt, reporting the highest growth rate in unsecured lending over the past five years, according to a November 2016 PwC survey; in the corporate market, businesses reported lower demand for credit with bank lending to non-financial businesses down 767 billion British pounds ($945 billion) in November. Source
The most recent report on US consumer credit shows credit card debt reaching a new high and surpassing the previous peak reached in 2008; outstanding credit card debt in June was $1.02 trillion; source discusses increased market competition in the credit card market; also notes higher default rates yet increased risk taking given the improved market environment. Source