Has your quality of life improved lately? Have you seen an increase in wages? Has your college degree landed you a big fat paycheck yet? If not, why not? According to official government approved statistics, you should be experiencing all of these things during our current economic recovery. But don’t worry, the truth is, if you haven’t experienced any of this yet, you’re not alone.
Earlier this month, we gave our researchers the task of trying to identify the personal loan trends for the next two years. We wanted to make sure that the loan providers we worked with were still the best on the market, especially when it comes to bad credit loans.
We were hoping to see signs that an improving economoy could improve or atleast sustain our current consultations and loan quotes, but what we actually found out during the course of our research was a little bit more shocking.
In the past, we’ve experienced increased loan applications when people feel comfortable about their future. For example, if they have a stable job, they tend to borrow knowing that they can afford to repay the loan at some point in the future.
In order to try and estimate our likely demand over the coming years, we took a close look at employment statistics and on the surface everything looked great. According to official statistics, jobs were being created and houses were being built and people were supposed to be happier and healthier.
But then we found the unofficial statistics and a different truth started to emerge.
Yes, whilst official statistics painted a picture of an unemployment rate of only 5%, these unofficial statistics showed a completely different picture. This led our research down a different path and we started to put together an alternative picture which we felt strongly enough about to share with you here.
The more we looked, the more we found out and the more concerned we started to become with the information we found.
As it happens, the number of jobs being created was actually down, housing was down, high profile big chain stores were closing everywhere, more graduates were unemployed and default rates on loans and credit were increasing.
We felt that if things were really as bad as all of this information showed, then we’d be losing personal loan business over the next couple of years, but in actual fact, this is not the case. Despite all the signs showing a weaker economy than many of the newspapers would have you believe, consumer appetite for credit is actually increasing!
In February 2015, the New York Fed said that “the number of credit enquiries within six months – an indicator of consumer credit demand – increased by 4 million from the previous quarter, up to 175 million“. That’s a 175 million new credit enquiries in the last quarter.
How can this be if the economy really is as bad as it looks?
Well, it seems that (from data taken from Lending Club) more than 50% of people applying for credit are using the new credit to roll-over existing credit. Whilst this information is not completely shocking to us, what is more worrying is the growing number of unemployed people combined with the growing number of defaulters.
This presents us with a big dilemma. On the one hand it is excellent for business because it means as more delinquencies occur, more people will suffer at the hand of bad credit referencing which means that the demand for our bad credit loans will increase.
On the other hand, it’s no good to anyone if things don’t start to get better soon.
What do you think? What have you experienced?
Download this infographic.