Study: Consumer Credit Markets Healing Post-Recession

New research suggests some consumer wounds from the recession have begun to mend.

The Federal Reserve Bank of New York this month released its Household Debt and Credit Report for the second quarter of 2011, which showed continued signs of healing in consumer credit markets. Banks have become more willing to lend, and consumers are more willing to borrow, the report said.

Small signs of relief can be found in the report, including loan balances falling, albeit by small amounts. Mortgage and home equity lines of credit both fell by $20 billion and consumer's non-real estate debt fell by $10 billion. The total amount of consumer debt now stands at $2.28 trillion, which is down 9.5% from its fourth quarter 2008 total.

Banks and credit companies are slowly loosening the reigns, with credit card limits increasing for the second straight quarter by 2 % or $60 billion. Open credit card accounts grew to 389 million, up 10 million from the previous quarter, and credit card inquiries also bounced back in this quarter, according to the report. This is a sign of consumer interest in acquiring new credit, the report said.

The housing market is also showing some signs of recovery, according to the research. Open mortgage accounts held steady for the second quarter, and the report found delinquency rates are also improvingdelinquent and seriously delinquent balance are both 15% below their levels one year ago.

Foreclosures are also down 22.8% from the first quarter, as were bankruptcies, which fell 23.8% from the second quarter of 2010.