Consumer Confidence Picks Up: Is There Hope?

NEW YORK (MainStreet) — Consumer confidence appears to have risen during the first quarter as consumers are making regular payments on their mortgages, according to Manilla.com.

The report examines the student, mortgage and auto loan debt of Manilla users as of April 1. This first quarter snapshot shows student and auto loans have both increased, while average mortgage balances have decreased since the fourth quarter of 2013, which could translate to a more stable economy.

Also See: Banks Are Making It Easier to Get a Mortgage

"With continued low interest rates for mortgages and a declining unemployment rate, more people are willing to buy homes, pursue education and purchase new cars, which is consistent with our user data," said Jim Schinella, CEO of Manilla.

The national average student loan balance was $14,578.48 at the end of the first quarter, compared to $14,411.07 at the close of the fourth quarter of 2013. However, the average loan payment this quarter is $122.85, which is slightly down when compared to last quarter's average payment of $131.76.

Also See: Grad School Student Debt Spikes: New America Foundation Student Loan Study

As of April 1, Manilla users were carrying an average of $148,603.92 in mortgage loans, compared to $148,960.99 as of January 1, 2014. Consumers are also paying 21% less in their monthly mortgage payments than last quarter, decreasing from $3,617.64 to $2,848.56.

Although the number of homes being sold has risen, the number of consumers choosing to remain as renters is increasing. Many Americans remain concerned about their financial security and are refraining from becoming homeowners. The homeownership rate slipped to 64.8% in the first quarter compared to 65.0 % a year ago and 65.2% in the previous quarter, which is the lowest level since the third quarter of 1995, according to the latest census data.

Manilla users were carrying an average of $13,263.14 auto in loan debt as of April 1, which is slightly higher than the end of the fourth quarter and correlates to the recent uptick in the automotive industry.

"An uptick in spending, particularly on big ticket items such as a house, car and student loan, can be a good signal for the American economy," said Gail Cunningham, spokesperson for the National Foundation for Credit Counseling. "However, it's only positive for the American consumer if they handle the new debt responsibly. Debt in itself is not a bad thing. It's the irresponsible use of credit that gets people into trouble."

Consumer confidence could continue to increase in 2014, said Marc Karasu, vice president of marketing for Manilla.

"We hope to see this trend continue through the end of the year," he said. "Ultimately, it will depend on a number of economic factors. According to our recent data, consumers ended 2013 with less debt than they had in 2012, and this quarter we're now seeing them spending more on homes and cars. All of these point to a continued rise in consumer confidence."

The latest statistics appear to demonstrate that consumers are working hard to manage their level of debt, Karasu said.

"Our data is focused on Manilla users and ultimately, we're seeing that those people are learning how to better manage their debt," he said. "Consumers should employ simple strategies like regularly checking their balances and making payments on time to avoid late fees. When possible, consumers should also look to increase their monthly payments to help cut down the time spent accruing interest on the loan."

The number of Americans who rate their financial situations as "excellent" or "good" has rebounded to 48%, up from the lows of 41% reached in 2010 and 2012, according to a recent Gallup poll. A slim majority or 52% continue to rate their personal situation as "only fair" or "poor," though this is down from a high of 59%.

These sentiments are the most positive they have been since 2008.

During the past two years, the personal finances of Americans has improved with 71% of Americans who now say they have enough money to live comfortably, while 28% say they do not. In 2012, only 60% of Americans said they have enough money to live comfortably.

--Written by Ellen Chang for MainStreet

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