October 30, 2009
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News: Encouraging Third Quarter Results
A worldwide economical slump has forced consumers to take a closer look at their budgets and credit card spending habits; Americans included. A sharp rise in the U.S. unemployment rate lead to record number mortgage foreclosures and credit card defaults. While consumers have been challenged in finding ways to deal with the recession and meet the everyday needs of their families, banks have been scrambling to find ways to cut their risk of continued increasing defaults. The latest statistic indicate that consumers have done a good job at pulling economical elements in line as a number of major credit card companies have reported that delinquencies are down.
Although Bank of American continues to be challenged in its credit card division, the company did realize a $146 million decrease in mortgages that 90 days or more delinquent. Good news for Wells Fargo as they reported a decrease in credit card defaults to 10.9 percent down from the previous 11.6 percent. Also reporting encouraging news is JPMorgan Chase. Chase realized a 2.8 percent rate of loan payments that were late 90 days or more, down from the 3.3 percent reported last quarter. Although lenders continue to experience large losses resulting from high defaults, they are optimistic in knowing that the default rate of increase has slowed down and is rising at a slower pace.
In addition to the decrease in credit card and mortgage default rates, unemployment benefits have also begun to trend down in spite of an unemployment rate that is looming near 10 percent. Experts forecast this rate will climb higher before it peaks at over 10 percent in 2010. The housing market has also begun to show some signs of stabilization. Many areas have reported modest increases in housing values and some analysts feel the country's housing market is at an inflection point. Disregarding all else, the one thing that all analysts agree on is that getting the National unemployment rate under control will ultimately put the country back on track.