NEW YORK, June 18 (UPI) -- Credit card companies raised spending limits for U.S. consumers at unprecedented rates before the home equity bubble burst in the summer of 2007, reports show.
While home values were rising, credit limits rose 17 percent to an average of $8,158, although median pay was falling and inflation was chipping away at spending power, USA Today reported Wednesday.
Credit to risky subprime borrowers doubled during the housing boom -- generally 2001 through 2006 -- the newspaper reported.
"There was rising equity in houses, growing wealth, and the economy was growing quickly," said James Chessen, chief economist for the American Bankers Association.
But, the credit card industry's zeal -- including a record 25.5 billion credit card offers from 2001 to 2005 -- created "a double financial bubble" in mortgage and revolving credit card debt, financial author Robert Manning said.
Kenna and Richard Baker of Des Moines told USA Today they were flooded with credit offers as the value of their home rose.
Today, however, they owe $30,000 on credit cards and $105,000 on a home valued at $63,000, the newspaper reported.