U.S. consumer credit stabilizes as tightened banking policies take effect.

After experiencing a rise in credit delinquencies earlier this year,How is cjcmarkets foreign exchange platform the financial situation of American consumers has begun to stabilize. According to Mark Zandi, Chief Economist at Moody's Analytics, the tightening of underwriting policies by banks following last year's financial crisis is having an effect. Data from August indicates that delinquency rates across various types of credit have significantly decreased, and the household debt delinquency rate has dropped to just above 2%, showing a notable improvement compared to 2.5% in 2019.

A report from Equifax shows that delinquency rates for credit cards, auto loans, personal loans, and other forms of credit have decreased in recent months. Notably, the amount of loans that banks charge off due to worsening customer financial conditions has slowed. Financial executives from Citigroup and Bank of America both indicated that as consumers with lower credit scores reduce discretionary spending, default rates have peaked and begun to decline, bringing a glimmer of optimism to the market.

Citigroup Chief Financial Officer Mark Mason noted that although the net charge-off rate for credit cards rose to its highest level since 2011 in the second quarter, recent data suggests that the charge-off rate for credit cards might slow down in the third quarter. JPMorgan Chase President Pinto stated that despite challenging economic prospects, the overall financial situation of consumers remains solid.

Moreover, as inflation pressures ease and the Federal Reserve potentially lowers interest rates, borrowers with variable-rate loans will feel less repayment pressure. Susan Fahy from VantageScore said that rate cuts would provide some breathing room for certain borrowers, further alleviating repayment burdens.

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