The pandemic knocked borrowers on their backs in the spring of 2020, but as the economy regained its footing, so, too, has the willingness of consumers to borrow.

Consumer applications for auto loans, new mortgages and revolving credit cards all mostly returned to pre-pandemic levels by , according to a new report by the Consumer Financial Protection Bureau.

Skyrocketing unemployment a year ago crushed demand for credit. Who wanted to take on a big car payment when they were unsure whether they could make the old car payment? Or if they weren’t driving to work but instead setting up shop at home?

Auto loan inquiries, for example, plunged 52% by the end of . States in the Northeast and California, together with Michigan and Nevada, experienced the largest drops.

Many are vaccinated and back to borrowing

Going forward, economists say the outlook hinges on the path of the virus and vaccination efforts. The jobs picture improved after progress was made getting people vaccinated and we saw strong stimulus support programs roll out of Washington.

The Federal Reserve policy committee moved Wednesday to keep short-term interest rates at the near zero level as worries about the delta variant spread. The Fed noted: “The sectors most adversely affected by the pandemic have shown improvement but have not fully recovered.”

“Despite the overall trend toward a recovery, we find that consumers with deep payday loans in Michigan subprime and subprime scores still have not recovered to their pre-pandemic levels, likely in part due to a tightening of credit for these consumers,” the Consumer Financial Protection Bureau noted.

Mortgages: When it comes to shopping for mortgages, we’ve seen unusually high activity in the mortgage market throughout the pandemic following a brief initial dip. Inquiries have exceeded their usual, seasonally adjusted volume by 10% to 30%, reflecting low interest rates and a stronger housing market.

Credit cards: Consumers appeared to be the least willing to put another piece of plastic into their wallets. It took a full year – from – for revolving credit card inquiries to recover back to their usual levels.

Car loans: Consumers with excellent credit or super prime scores surprisingly are not shopping for car loans at pre-pandemic levels. But the report noted that there could be a drop in demand for credit among this group of consumers, which may include workers who are able to work from home may not want to buy a new car if they’re not commuting. (The report didn’t note that a lack of cars and trucks may be coming into play or how the semiconductor squeeze cut into inventories and sales. But that, too, could be an issue.)

Overall, the consumer’s willingness to take out an auto loan returned back to pre-pandemic levels by , according to data reviewed by the federal agency, which was established after the 2008 financial crisis.

Low auto loan rates help offset high prices

Jonathan Smoke, chief economist for Cox Automotive, said credit conditions have been favorable all spring and summer, supporting strong demand for car and truck sales.

Credit to buy a car is easier to get than it was a year ago, he said, shifting back to where it was before the pandemic started.

“Rates continue to be lower than a year ago,” Smoke said. “Spreads had widened last year during the pandemic, especially for lower credit tiers.”

But now most car loan borrowers have seen lower rates, he said, especially subprime borrowers who have seen lower rates this spring and summer.

“Now that bond yields are retreating from their early spring highs,” Smoke said, “it is likely that consumers will continue to see low and attractive rates on auto loans.”

And lower auto loan rates can help to offset the impact of price increases since most people take out a loan to buy a car or truck.

Not surprisingly, consumers are more willing to borrow if they’re feeling more secure about their jobs outlook and their finances.

Total consumer credit shot up 10% in May, according to Federal Reserve Consumer Credit Report. That’s the biggest increase in five years.

The biggest factor in the renewed borrowing interest is the improved, and reopening, economy,” said Greg McBride, chief financial analyst for Bankrate.

The fearful economic “what if’s” of 2020 are giving way to a greater confidence in a stronger economy, he said.

Low rates also are helping fuel many purchases. The average fixed rate for a 30-year mortgage is 3.04% – down from 3.3% last year, according to Bankrate. An even better rate of 2.5% is available with no points. (Mortgage points amount to extra fees that a borrower pays a lender to reduce the interest rate and lower the monthly payment. (The upfront cost can make sense if you plan to stay in the home or hold onto the mortgage for a long time.)

When it comes to a five-year new car loan, the average rate is 4.15% now, down from 4.24% last year. McBride noted the best rates are in the low 2% range, but occasionally you’ll see credit union offer deals of 1.99%.

Average rates on a four-year used car loan are around 4.71% – down from 4.99% a year ago. Again, he said, the best rates can be in the 2% range for borrowers with strong credit.

When it comes to credit cards, the average rate is now %, according to Bankrate. That’s up a bit from % last year. But borrowers with strong credit can get much better deals. Some promotions are offering 0% for up to 18 months for purchases and balance transfers, McBride said.

Credit card debt tumbled, as consumers paid down high-cost credit card debt and cut back on big vacation spending and other purchases for much of the past year.

Credit card balances fell by $49 billion in the first quarter, the second largest quarterly decline in the history of the data since 1999, according to the Federal Reserve Bank of New York. Credit card balances are $157 billion lower than they had been at the end of 2019.

By contrast, balances continued to increase for mortgages, student loans and auto loans. The Fed noted that auto loan balances grew for the past three quarters and increased by $8 billion in the first quarter of 2021, after a brief pause in the second quarter of 2020, when many dealerships were closed.

The Fed noted that older consumers – particularly those age 60 and up – may continue to be more cautious about the risks of the virus itself and may be using their credit cards less frequently, while younger people resumed spending and their outside activities.

Consumers, no doubt, found themselves on a firmer financial footing after three rounds of stimulus checks – and now many families are seeing hundreds of dollars in monthly advance payments from July through December for the child tax credit.

Some of that extra cash – and extra confidence in the economy – clearly deserves some credit for the rebound in borrowing.