Consumer borrowing rises
WASHINGTON (AP) - January 8, 2008 The Federal Reserve reported Tuesday that consumer borrowing
rose at an annual rate of 7.4 percent in November, far higher than
the 1 percent rise in October.
The category that includes credit card debt surged at an annual
rate of 11.3 percent, a six-month high, reflecting the fact that
shoppers are continuing to rely heavily on their credit cards to
finance purchases since home equity lines of credit have become
harder to get.
The category that includes auto loans also increased in
November, rising at a rate of 5.1 percent after having fallen by
3.5 percent in October.
The 7.4 percent overall increase in credit pushed total credit
up by $15.4 billion, much stronger than the $8.5 billion increase
that analysts had been expecting.
The 11.3 percent rise in credit card debt was the seventh
straight month of strong gains in this area and was the biggest
jump since a 12.8 percent rise in May.
Economists believe that consumers are being forced to rely more
heavily on borrowing on their credit cards with the collapse of the
housing market, which has depressed home prices and prompted banks
to tighten up on lending standards for mortgages and home equity
lines of credit.
The five-year housing boom had prompted a lot of homeowners to
refinance their mortgages and take out home equity lines of credit
to take advantage of the surging values of their homes, a boom that
is being reversed in many parts of the country by the current
housing slump.
The overall increase left total consumer credit at a record
$2.51 trillion. The Fed's credit report tracks all debt not secured
by real estate meaning that mortgages, a big chunk of the debt load
carried by most households, is not covered.