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2014 could be a record year for American lenders

Nov 14, 2013 Walt Wojciechowski

Short term lending outlets, traditional banks and other loan providers could see a bumper year in 2014. As the global economy rebounds, financial experts are continuing the adopt a more optimistic outlook regarding the financial future of the American consumer force and fiscal service sector.

A number of factors have contributed to the rosy predictions many banking experts have expressed in the last few months. A recent Bloomberg article highlighted some of the positive trends that are making both banks and American citizens more willing to get involved in widespread lending activity once again.

Job security outlook
Even with the federal austerity initiatives reducing government financing for many sectors, the source noted that a low unemployment rate has boosted job-security confidence levels among American consumers, which should make them more likely to seek loans for major purchases such as homes and vehicles. Also, because these borrowers have secure employment options, there will be less risk associated with ramping up lending for financial institutions than during the Great Recession.

The source stated that Ben Garber, a Moody's economist, believes these spending factors will off-set any negative effects brought on by government funding cuts.

"Consumers taking on more debt at a time when the deficit is shrinking would be a strong positive for the economy," Garber told Bloomberg. "This will help offset some of the fiscal austerity that we're experiencing."

Data also suggests that Americans are becoming more capable of responsibly handling their finances. The source stated that the household debt as a share of incomes was down to 92.2 percent in the most quarter, significantly lower than the reading's 114 percent peak recorded during 2009.

The economic downturn provided American consumers with many hard financial lessons. However, this data shows that many borrowers in the United States are taking the necessary steps to monitor their assets more closely. If this trend continues, short term lenders and other credit providers will be able to approve more loan applications because risk levels will likely decline.

A number of other upward trending reports indicate a positive financial future for America. Bloomberg reported that the bankruptcy rate has dropped in the last year, banks have loosened lending policies for business clients and home buying activity continues to grow.

Lenders expecting growth
All of these readings have been noted by lending experts who believe 2014 could be a landmark year for financial service firms across the country. A recent report from Phoenix Management Services found that lenders' expectations for the long term growth in the lending market has improved significantly. In its third-quarter lending survey, the source reported that 41 percent of lenders predict the economy will perform at a B-grade level in the next six to 12 months, as opposed to the current C-grade level. That marks a spike of 21 percentage points compared to the second-quarter survey.

Backing up the claims made in the Bloomberg article, Phoenix respondents also stated that they believe loan losses, bankruptcies, unemployment and bank failures will also drop in the next six months. The source suggested that this shows lenders' sentiments point to a recovering economy.

Although there is still progress to be made, lending outlets should be boosted by these trends. Consumer activity has a major impact on the national economy, so increased loan access could prove beneficial for long-term growth.

With Americans starting to become more careful with their finances, the fact that lenders believe borrowing will increase in the next year is an extremely positive sign. Potentially, 2014 could prove to be a year of robust recovery and return to positive economic fortune in the United States.