Georgians' Holiday Spending Plans Reflect Current Consumer Mindset

/PRNewswire/ -- While not pulling back to Scrooge-ish extremes, Georgia merchants may again face cautious shoppers this holiday season, according to the latest poll from Georgia Credit Union Affiliates (GCUA).

While about half (52.8 percent) of nearly 6,000 credit union members surveyed statewide said they plan to spend about the same as last year, 44.3 percent indicated that they plan to spend less on the holiday season than in 2009. This statistic appears to reflect a continued trend in austerity around gift-giving, given that 51.2 percent of respondents to GCUA's survey in 2009 said they planned to spend less on the holidays than the previous year.

Backing up the latest poll numbers, data from 39 credit unions statewide shows Georgia consumers have a penchant for bolstering their account balances. During the first nine months of 2010, savings deposits grew by 6.3 percent and checking account balances increased by 11.4 percent.

The poll results and credit union data are included in the latest "Paying Attention" report from GCUA, gauging the mindset of Georgia consumers on economic and personal finance. The report also recaps quarterly lending and saving statistics from credit unions statewide.

"Shoppers who already trimmed their spending in 2009 will be frugal again this year," said Mike Mercer, president and CEO of GCUA. "The poll results appear to bear that out, with just 2.9 percent of respondents saying they plan to spend more this holiday season."

Overall, the poll found that:

* 52.8 percent plan to spend about the same this holiday season as last year, while 44.2 percent plan on spending less. Only 2.9 percent plan on spending more this holiday season than last year.
o In 2009, 51.2 percent said they planned to spend less than the previous year while 45.4 percent planned to spend about the same. 3 percent expected to spend more in 2009 compared to the year before.
* Most shoppers still plan to spend modest amounts on gifts. 43.9 percent of respondents are planning to spend between $100 and $500 while 28.7 percent are planning to spend between $500 and $1,000. In a true turn toward austerity, 16.4 percent said they plan to spend less than $100 in total on gifts this year; conversely, 11 percent plan to spend more than $1,000.
o Last year, 47.9 percent said they planned on spending between $100 and $500 in total, 30.8 percent planned on spending between $500 and $1,000 and 11.4 percent said they were going to spend less than $100, and 9.9 percent planned on spending more than $1,000.
* The majority of respondents (77.8 percent) are planning to pay mostly or completely by cash compared to 17.3 percent who plan to pay using a credit card. 4.9 percent plan to use savings from a Christmas club account or other means.
o In 2009, 75.6 percent said they planned on paying all or mostly by cash compared to 11.8 percent who planned on paying all or mostly by credit card. 12.7 percent said they would pay with savings from a Christmas club account or other means.


Credit Union Data Shows Continued Trend Toward Savings

In addition to the consumer poll, GCUA compiled data from 39 credit unions from across the state representing 90 percent of credit union assets and 82 percent of members in Georgia to gauge current lending and savings trends. The data compare year-to-date figures from the first nine months of 2010 to the same period in 2009. Summarized below, the findings indicate a continued trend toward savings among consumers, while figures for lending varied (all rates are annualized):

* Compared to the same period last year, savings deposits grew by 6.3 percent during the first nine months of 2010 and by 7.1 percent over the past year.
* Checking account balances increased by 11.4 percent between January and September and by 16.5 percent over a 12-month period.
* Money market account balances grew by 23.8 percent during the first three quarters of the year and by 35.6 percent over the previous 12 months.
* New vehicle loan balances decreased by 9.7 percent over the past year; however, balances for used car loans increased more than 7.7 percent in the first nine months of 2010, and 10 percent over the past 12 months.
* First mortgage balances increased by 5.8 percent during between January and September and by 12.5 percent over a 12-month period.
* The number of bankruptcy filings among members rose by 13.8 percent over the past 12 months.


"Credit union members represent a good cross section of middle-class Georgians," Mercer said. "Our latest report shows that Georgia consumers seem to be settling into a routine of conscious saving and cautious spending."

More information is available at www.georgiacreditunions.org or on www.facebook.com/creditYOUnion.

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Equifax Data Show U.S. Consumer Payment Trends Continue to Deteriorate

/PRNewswire/ -- Consumer delinquency rates for bankcards, first mortgages and home equity lines of credit again rose month-to-month in November, according to Equifax Inc.'s (NYSE:EFX) monthly Credit Trend Report.

Home mortgages at least 30 days late reached another record of 7.91 percent in November (in total dollars), up from 7.76 percent in October and 7.65 percent the previous month. This record rate is a significant increase over the 5.83 percent rate of November 2008 and the 3.93 percent rate of November 2007.

In addition, home equity lines of credit (HELOC) available to consumers are now an estimated $68 billion lower and the number of accounts is an estimated 855,000 lower than the September 2008 peak of approximately 14.5 million accounts. This represents an improvement from October when outstandings were $77 billion lower and accounts were lower by approximately 934,000. Delinquency rates have crept up from 3.39 percent in October to 3.43 percent in November. These rates far exceed the 2.95 percent rate of November 2008 and the 1.92 percent rate of November 2007.

"The story of 2009 continues to be one of consumer retrenchment and credit tightness as people strive to pay down debt or are forced to abandon it, and lenders more aggressively manage risk in their portfolios," said Dann Adams, president of Equifax's U.S. Consumer Information Solutions.

U.S. consumers reduced their debt by more than five percent or $575 billion from a year ago. First mortgage debt dropped 5.4 percent; credit cards by 7.3 percent and auto loans by 9.5 percent. The declines put overall consumer debt at September 2007, pre-recession levels of about $11 trillion.

Bankcard issuers continued a year-long trend of closing accounts and reducing credit lines. Card risk management programs have accelerated since July of 2008, reducing card credit lines by $803 billion and the number of accounts by 93 million. Delinquency rates for bankcards picked up notably since the end of 2008 in tandem with rising unemployment. The November 2009 60-days-past-due rate of 4.62 percent is almost a full percent higher than the November 2008 rate of 3.76 percent. However, the rate still remains below the peak of 4.79 percent in May 2009.

In addition, the number of bankcard accounts opened in September -- 2.4 million -- was 45 percent lower than September 2008. Year-to-date, the number of new accounts is down 46 percent from the same period in 2008. Also, lenders are being more selective about who they give credit to as the percent of cards issued to those with credit scores greater than 740 grew from about 30 percent in 2007 to almost 51 percent so far this year.

With U.S. home prices declining, originations for home equity lines of credit are also declining. In September of this year (the most recent month that data is available) originations were 75,600, 36% below the September 2008 total of 117,800. Year-to-date 2009 new home equity lines opened -- 761,000 -- were 47 percent below 2008 year-to-date totals of 1.5 million. This continues a trend from 2008 when total originations were 1.7 million lines, 41% below the total for 2007 (2.9 million lines).

Furthermore, home equity lines have primarily been issued to lower-risk consumers. Eighty-one percent of the consumers who received HELOCs in September 2009 were considered low-risk (Equifax Risk Scores of 740 and above) an increase from 66% in September of 2007. In conjunction with declining home prices and home equity, average home equity lines are 25% lower over the past two years, declining from approximately $105,000 to $79,000 today.

"The contraction in home equity lines is a reflection of the credit crunch both consumers and small businesses are facing," said Adams. "Restrictions in this traditional source of financing make finding credit harder than ever."

Regionally, home equity line originations have diminished in states where home price values have been the most volatile, notably California and Florida. California comprised almost 20% of line originations two years ago with nearly 38,000 originations in September 2007 but dropped to second with about 7% or 5182 originations in September 2009. Florida, once the second top state by originations has dropped to ninth.

The dramatic impact of these shifts is illustrated by new credit lines available in California declining from $6 billion in September 2007 to well under $1 billion today.

Data for the Credit Trends Monitor Report is sourced from Equifax's nearly 200 million files of US consumers using credit.

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Consumer Savings Higher as Debt Declines; Mortgage Delinquencies, Bankruptcies Continue to Grow in September

/PRNewswire/ -- Consumers continue to fight the recession by saving more and paying off debt; banks are responding with more careful lending; and stressed homeowners increasingly are falling behind on mortgages on their primary residence, according to the latest Equifax Inc. (NYSE:EFX) Credit Trends Report, a summary of key economic trends the company distributes to its customers every month.

Some of the key findings in the September report include:

Total consumer debt has been reduced by more than $440 billion, down 3.8 percent from its peak in the third quarter of 2008.

The estimated consumer savings rate continued to be relatively high at 3.71 percent in the third quarter - down from 4.74 percent in the second quarter - but much higher than savings rates that were as low as 1.30 percent as recently as the third quarter of 2008 and .20 percent in the first quarter of 2008.

Bankcard issuers continue to close accounts and reduce credit lines. Since September 2008, there are 88 million fewer accounts and credit lines have been reduced by $751 billion. Delinquency rates also are the highest in five years with 4.36 percent of bankcard accounts more than 60 days late in September 2009 compared with 3.39 percent in September 2008 and 2.80 percent in September 2007.

New accounts opened, based on end of July data, were 54 percent lower than July 2008. The percent of cards issued to those with Equifax Risk Scores greater than 740 grew from about 28 percent in July 2007 to more than 50 percent at the end of July this year. Conversely, the percent of cards issued to those with Equifax Risk Scores 660 and below dropped from 42 percent in July 2007 to slightly over 22 percent in July 2009.

Home mortgages at least 30 days late reached a record 7.65 percent (in dollars) in September, up from 7.58 percent in August and 7.32 percent the previous month. This record rate is a significant increase over the 5.17 percent rate of September 2008 and the 3.55 percent rate of September 2007.

Home equity lines of credit are an estimated $65 billion lower in September 2009 than they were in September 2008 and the number of accounts is an estimated 754,000 lower. Delinquency rates are at an all-time high of 3.39 percent versus 2.66 percent in September 2008 and 1.59 percent in September 2007.

Personal bankruptcies also continued to rise. For the first nine months of 2009, filings are 40 percent higher than last year. Filings have already exceeded one million compared with the 2008 year-long total of 1.1 million.

"American consumers are making the most fundamental change in the way they handle their finances we have seen in a decade," said Dann Adams, president of Equifax's U.S. Consumer Information System. "They are conserving cash and reducing debt across the board. We haven't seen savings rates this high since shortly after the third quarter of 2001 - just after 9-11 - when they were at 3.25 percent.

"At the same time, high unemployment is being reflected in more homeowners falling behind in their primary mortgages," Adams added. "As a result, banks and other financial institutions are being much more careful in managing their risks.

"The data reflect an economy in transition with consumers doing better with their financial management, but with many still struggling in the face of high unemployment and restricted credit."

Data for the Credit Trends Monitor Report is sourced from Equifax's more than 200 million files of US consumers using credit. The personal savings rate information comes from CreditForecast.com, which uses U.S. Bureau of Economic Analysis data.

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Bankrate: Mortgage Rates Remain Volatile

PRNewswire-FirstCall/ -- Mortgage rates fell this week, with the average 30-year fixed mortgage rate dropping to 6.2 percent. According to Bankrate.com's weekly national survey, the average 30-year fixed mortgage has an average of 0.4 discount and origination points.

The average 15-year fixed rate mortgage popular for refinancing retreated to 5.95 percent, while the average jumbo 30-year fixed rate was down slightly to 7.61 percent. Adjustable mortgage rates were sharply lower, with the average 1-year ARM down to 5.89 percent and the average 5/1 ARM pulling back to 6.21 percent.

Mortgage rates continue to be volatile, yo-yoing up and down from one day to the next. Heightened economic worries pushed mortgage rates lower versus last week, but the continued twists and turns of the credit crunch are certain to produce more volatility in mortgage rates. Although mortgage rates are pegged to long-term Treasury yields, the spread above risk-free Treasury yields is ever-changing as credit worries prevail. The movement of fixed mortgage rates is not directly influenced by the Federal Reserve's cut to short-term interest rates.

This year has been a wild ride for mortgage rates, with a low in January of 5.57 percent and a high of 6.77 percent in July. At today's rate of 6.20 percent, a $200,000 loan carries a monthly payment of $1,224.94.

SURVEY RESULTS

30-year fixed: 6.20% -- down from 6.41% last week (avg. points: 0.4)
15-year fixed: 5.95% -- down from 6.14% last week (avg. points: 0.44)
5/1 ARM: 6.21% -- down from 6.49% last week (avg. points: 0.36)



Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

For a full analysis of this week's move in mortgage rates, go to http://www.bankrate.com/mortgagerates

The survey is complemented by Bankrate's weekly forward-looking Rate Trend Index, in which a panel of mortgage experts predicts which way the rates are headed over the next 30 to 45 days. More than half of respondents, 53 percent, expect rates to retreat further in the coming weeks. However, 41 percent predict a rebound in mortgage rates, while just 6 percent forecast that mortgage rates will remain more or less unchanged in the next 30 to 45 days.

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