St Louis Mortgage Refinancing and Real Estate News –
News: Tight Economy Means Americans Are Borrowing Less
In a not so surprising move, Americans borrowed less for a 10th consecutive month in November with total credit and borrowing on credit cards falling by the largest amounts on records going back nearly seven decades.
A report issued by the Federal Reserve explained that borrowing dropped by $17.5 billion in November 2009 which was a much bigger decline than the $5 billion decrease economists had anticipated.
In the same month, $17.5 billion drop in total credit was the biggest amount in dollars terms since records began in 1943. This represents an 8.5 percent fall from the October borrowing level. That was the biggest percentage drop since total credit declined 9 percent in May 1980.
The borrowing category that includes credit cards fell by $13.7 billion, an all-time record decline in dollar terms. The drop was 18.5 percent from November, the biggest decline in percentage terms since a 29.6 percent plunge in December 1974.
The central bank’s credit report excludes home loans and home equity mortgages, only covering borrowing that is not secured by real estate and housing.
The drop in overall credit for 10 straight months was a record in terms of consecutive declines, surpassing the old mark of seven straight declines set in 1943 and again in 1991.
There are several reasons Americans are borrowing less. Many remain fearful about their job prospects while others are trying to replenish lost investments.
But potential borrowers should also keep in mind that waiting could cost them money that could be saved by not taking advantage of historically low rates. These interest rates won’t last forever.
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