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Marketing: Goals in reverse

National Mortgage Professional
Jan 15, 2008

Sub-prime lending meltdown fuels risk and opportunityMortgagePress.comU.S. recession, consumer debt, credit cards, unemployment, consumer confidence The effect of the sub-prime mortgage meltdown continues to radiate out across the credit markets. Alan Greenspan, the former Federal Reserve chairman, stated in recent interviews that there is a one-in-three chance of a U.S. recession. New research from TowerGroup explores the impact on consumer debt and credit cards. In analyzing four key economic factors that influence both the U.S. economy and consumers' spending behaviors--unemployment, consumer debt, consumer confidence and consumer savings--TowerGroup forecasts that even as consumers moderate their spending in the coming months, the number of consumer loan delinquencies will continue to rise. Rate relief from federal regulators is only the beginning of the story. Mortgage lenders are likely to bend to public and government pressure to be more flexible when making repayment arrangements with mortgage customers to prevent foreclosure. While the sub-prime mortgage credit collapse has tightened credit availability in both consumer and commercial markets, banks appear to be anticipating the need to slacken credit standards for specific products like credit cards in an effort to accommodate credit needs and increase balances. TowerGroup believes this lowering of approval standards signals that credit card lenders are preparing to attract and grow balances previously lost to home equity lines of credit, which are now unavailable to many consumers. The loosening of standards for certain products represents an opportunity for businesses that support credit card lenders with products aimed at new customer acquisition. Marketing companies, software providers and credit/risk scoring companies will benefit from this shift. But while credit card issuers have the opportunity to attract new customers, not everyone will be looking for additional credit. TowerGroup expects continued growth in the prepaid and debit card segments as well as a continuing shift in dollar volume to transactors for households unwilling or unable to take on additional debt. For more information, visit
Jan 15, 2008
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