Surging home values could push household wealth, consumer borrowing

In the aftermath of the financial crisis, millions of homeowners saw the value of their properties fall markedly, which significantly damaged their personal financial situations. As a result, consumers spent and borrowed less money in the years immediately after the recession.

However, home prices have been on the rise for the past year and a half - a trend that continued in June, which could help boost demand for short term lending as household wealth increases.

Home values jump significantly in June
The price of properties in the United States had another positive month in June, with the CoreLogic Home Price Index reporting a 1.9 percent bump from the previous month and 11.9 percent year-over-year increase, marking the 16th straight monthly improvement.

"The U.S. housing market experienced robust price appreciation during the first half of 2013 and our forecast calls for double-digit growth through July," said Anand Nallathambi, president and CEO of CoreLogic. "Despite their rebound of late, home prices remain reasonable in a historical context, with most states near peak affordability levels."

Moving forward, prices are expected to jump further. The CoreLogic Pending HPI said July will see a 12.5 percent year-over-year gain and 1.3 percent bump from June.

"This trend in home price gains is moving at the fastest pace since 1977," said Mark Fleming, chief economist for CoreLogic.

Surging consumer confidence also pushing spending, borrowing activity
Coupled with rising home prices, high consumer confidence levels could also lead Americans to increase demand for short term lending.

The Thomson Reuters/University of Michigan Index of Consumer Sentiment reached 85.1 in July, from 84.1 in the previous month and 72.3 a year ago - a six year high. Meanwhile, the Current Conditions Index, jumped 5.1 percent on a month-to-month basis and 19.2 percent when compared to the same time last year.

"The July survey suggests a growing resilience among consumers that will enable them to more easily withstand the cross-current inevitable in a slow growth economy," said Surveys of Consumers chief economist Richard Curtin. "Nonetheless, this was a robust sign that consumers expect the expansion to continue and act to speed up their buying plans."

Factors that have been boosting confidence include rising home and stock prices, as well as a strengthening employment situation.

Short term lending demand could increase with home prices, consumer confidence
Should both home prices and consumer sentiment continue to climb, more and more Americans may begin to spend money. As a result, demand at short term lenders should follow suit, as borrowing activity typically trends upward with spending.

In addition to preparing for an influx of loan applications, short term lenders also need to be sure that their ID verification procedures are up to par. When there are a lot of customers, criminals might believe it is a good time to attempt to fraudulently take out a loan, as there is a greater chance a small error could be made, which is why lenders need to be sure that people applying have properly verified identities.