U.S. banks are offering more loans along with the economic growth. In July 25, borrowers reach a $7.1 trillion, surpassing the October 2008 numbers by 2.9 percent based on the Federal Reserve data.
According to the Federal Reserve, the increasing number of borrowers is helping the economy significantly. A 1.5 percent annual growth was seen in the second quarter backing up the FED’s claims.
Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, explained that lending may be working again for the U.S. economy. This is because more people are now borrowing, as more lending companies and banks are opening their hands to lending.
Increased borrowing has been one of the best signs of economic growth for the United States. This is mainly because when there is a need to borrow; banks see more business, thus gaining more economic growth.
Though economic growth via lending is not clear this year, the Federal Reserve data officials say that it would show greater impacts in 2014. This is especially if the banks continue with lending with a lower benchmark.
Because of recession that pulled the U.S. economy in the last quarter of 2008, more banks have increased their interest rates and benchmarks. Because of this, it has become more difficult for borrowers to apply for mortgage despite their credibility.
However, this year, banks have started to lower their interest rates on loans with the evident number of demand. More borrowers are now keen with auto loans and home mortgage.
Home Mortgage Growing
Meanwhile, more Americans are seeking home mortgage loans. In fact, mortgage has reached two-year high sales this October. The increase was due to the high increase of demand to own homes as wells as the existence of affordable housing.
US citizens are now purchasing dwellings from new homes to existing homes. In fact, a 4.75 million annual rate of existing dwelling sales was recorded last month. This data tops that of the data before economic instability in 2008.
According to experts, the increase in mortgage may have been pushed by the existence of affordable properties. Despite the economic growth, prices of constructions are still affordable. Prices of materials as well as labor remain the same, thus housing remains relatively affordable.
Prices of existing homes that were for sale for a cheaper cost due to bankruptcy or credit instability during the time of recession has still remain the same. This is because while a number of borrowers are growing, more citizens are still solving their bad credit problems.
Existing-home sales are still down to 3.39 million annual rates, which resulted in a 7.25 million total of purchase from citizens seeking homes.
On another note, the US government is seeking ways to help the bad credit borrowers avail loans.