• Balances and Delinquencies Begin to Stabilize Across Many Credit Products

    Source: Nasdaq GlobeNewswire / 12 Nov 2024 08:00:01   America/New_York

    CHICAGO, Nov. 12, 2024 (GLOBE NEWSWIRE) -- Consumer credit balances continued to grow across all credit products during the third quarter of 2024, but in many cases, that growth has slowed. These are among the findings from the newly released Q3 2024 Quarterly Credit Industry Insights Report (CIIR) from TransUnion (NYSE: TRU). The findings point to a level of stabilization in the consumer credit market which may signal a return to more typical credit use patterns across many lending products.

    The report reveals that after a period of rapid balance growth across a range of credit products, in particular credit cards and unsecured personal loans, balance growth has slowed. While both credit products saw year-over-year (YoY) growth of approximately 15% in the year ending Q3 2023, YoY balance growth for the year ending Q3 2024 was only 6.9% for credit cards and 3.6% for unsecured personal loans.

    “The moderated growth in balances is likely the result of a number of factors in combination,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “For example, looking at credit cards, lenders in many cases have tightened underwriting standards which may have resulted in lending to borrowers less likely to grow balances quickly. In addition, as inflation has returned to more normal levels in recent months, it has also meant consumers may be less likely to rely on these credit products to make ends meet.”

    Balances Are Growing More Slowly Than One Year Prior

     Q3 2024YoY % ChangeQ3 2023YoY % Change
    Credit Card
    		$1.06 Trillion+6.9%$995 Billion+15.0%
    Unsecured Personal 
    Loans    		$249 Billion+3.6%$241 Billion+14.8%
         

    The report also found that YoY growth in delinquency has moderated across most credit products. Credit cards and auto saw slower YoY growth in delinquency as compared to one year prior, while unsecured personal growth saw a steeper rate of decline.

    Delinquencies Are Declining, or Growing More Slowly, Across Many Credit Products

     Q3 2024YoY Change Q3 2023YoY Change
    Credit Card –
    Borrower-Level Delinquency
    Rate (90+ DPD)
    		2.43%+9 bps2.34%+40 bps
    Unsecured Personal Loans –
    Borrower-Level Delinquency
    Rate (60+ DPD)    		3.50%-25 bps3.75%-14 bps
    Auto –
    Consumer-Level Delinquency
    Rate (60+ DPD)    		1.6%+7 bps1.53%+24 bps
         

    To learn more about the latest consumer credit trends, register for the Q3 2024 Quarterly Credit Industry Insights Report webinar. Read on for more specific insights about credit cards, personal loans, auto loans and mortgages.

    Key card metrics begin to stabilize as balance and delinquency growth slows

    Q3 2024 CIIR Credit Card Summary

    A number of metrics associated with credit cards show a moderation of growth when compared to recent quarters. One instance can be found in the growth of balances. YoY growth of credit card balances for Q3 2024 was 6.9%. However, this pales in comparison to the 15% YoY balance growth that took place between Q3 2022 and Q3 2023. Average credit card debt per borrower has also been slowing relative to prior years. Average debt per borrower rose only 4.8% YoY in Q3 2024 as opposed to 11.2% the year prior, and 12.4% the year before that. Another sign of moderation can be seen when examining delinquencies. The percentage of consumers 90+ days past due (DPD) increased from 2.34% in Q3 2023 to 2.43% in Q3 2024, representing a 9 bps increase, versus the 40 bps observed last year.

    Instant Analysis

    “We appear to be moving from higher balance and delinquency growth observed between Q3 2021 and Q3 2023 to a slower growth environment. On the consumer front, lower inflation in recent quarters, combined with continued wage gains for consumers, may be driving consumers toward a financial equilibrium where they balance their monthly expenses and their monthly budget. Increased lender discretion is playing a role in this slowdown, resulting in a decrease in new credit card originations. The origination decline is most likely a response to the 90-day delinquency number remaining higher than observed in over a decade.”

    - Paul Siegfried, senior vice president and credit card business leader at TransUnion

    Q3 2024 Credit Card Trends

    Credit Card Lending Metric
    (Bankcard)    		Q3 2024Q3 2023Q3 2022Q3 2021
    Number of Credit Cards
    (Bankcards)    		554.5 million537.9 million510.9 million472.4 million
    Borrower-Level Delinquency
    Rate (90+ DPD)    		2.43%2.34%1.94%1.14%
    Total Credit Card Balances$1.06 Trillion$995 billion$865 billion$727 billion
    Average Debt Per Borrower$6,380$6,088$5,474$4,869
    Number of Consumers
    Carrying a Balance    		171.4 million168.6 million163.9 million155.7 million
    Prior Quarter Originations*18.8 million20.5 million21.3 million19.0 million
    Average New Account Credit
    Lines*    		$5,821$5,777$5,021$4,200

    *Note: Originations are viewed one quarter in arrears to account for reporting lag.
    For more credit card industry information, click here for episodes of Extra Credit: A Card and Banking Podcast by TransUnion.
    Click here for a Q3 2024 credit card industry infographic.

    Originations grow and delinquencies decline as lenders continue shift to lower-risk borrowers

    Q3 2024 CIIR Unsecured Personal Loan Summary

    Unsecured personal loans continued to trend positively with accelerating growth in originations and declining delinquencies. Originations for Q2 2024, the most recent quarter of data available, stood at 5.4 million, which represents YoY growth of 5.4%. While this still remains below Q2 2022’s 6.0 million, it is the second highest Q2 on record. Super prime originations grew 13.4% YoY, continuing to be the highest-growth risk segment. Subprime and near prime had their second quarter in a row of growth after five quarters of YoY decline. Despite this growth, borrower-level 60+DPD delinquency saw YoY declines for the second consecutive year, down 25 bps to 3.5% in Q3 2024. This change was driven by a mix shift and improvement in subprime delinquencies, which fell to 11.9% from 12.9% a year ago, while super prime delinquency ticked up.

    Instant Analysis

    “The unsecured personal loan market continues to be a bright spot in the consumer lending market, showing growth with declining delinquencies. The performance improvement was driven by better subprime performance even as lenders begin to cautiously open their buy boxes. It is worth watching to see if this trend continues as lenders return to growth across risk tiers in the new year.

    - Liz Pagel, senior vice president of consumer lending at TransUnion

    Q3 2024 Unsecured Personal Loan Trends

    Personal Loan MetricQ3 2024Q3 2023Q3 2022Q2 2021
    Total Balances$249 billion$241 billion$210 billion$156 billion
    Number of Unsecured
    Personal Loans    		29.3 million27.8 million26.4 million21.6 million
    Number of Consumers with
    Unsecured Personal Loans    		24.2 million23.2 million22.0 million19.2 million
    Borrower-Level Delinquency
    Rate (60+ DPD)    		3.50%3.75%3.89%2.52%
    Average Debt Per Borrower$11,652$11,692$10,749$9,387
    Average Account Balance$8,514$8,644$7,946$7,236
    Prior Quarter Originations*5.4 million5.1 million6.0 million4.4 million

    *Note: Originations are viewed one quarter in arrears to account for reporting lag.
    Click here for additional unsecured personal loan industry metrics.

    Mortgage originations remain flat year-over-year as delinquencies tick up

    Q3 2024 CIIR Mortgage Loan Summary

    After seeing a YoY increase in the prior quarter, mortgage originations were flat YoY in Q2 2024, the latest quarter for which mortgage origination data is available, despite seeing a 29% seasonal QoQ increase. However, after a long period in which mortgage originations have been relatively depressed, largely due to relatively high interest rates, the Federal Reserve recently made a ½ point rate reduction with the potential for future cuts. It remains to be seen if this helps spur the mortgage market, as well as the refinance market, which made up just over 13% of originations in Q2 2024. While this represents a slight increase in share, it remains very low relative to historical figures. Delinquencies continue to tick upward among homeowners. For Q3 2024, the 60+ DPD delinquency rate was at 1.22%, up 27 bps from Q2 2023’s 0.95%. However, these rates remain extremely low, and have been helped by the still strong job market as well as the fact that the majority of mortgage accounts and balances are held by 760+ risk score consumers.

    Instant Analysis

    “It is worth watching to see if, now that the Federal Reserve has begun lowering interest rates, the mortgage origination market may begin to see growth after a lengthy sluggish period. The year-over-year increase in delinquencies is certainly something worth monitoring. However, it’s important to note that current delinquency rates remain low in comparison to long-term measures. It remains to be seen if the aforementioned interest rate reductions and cooling inflation help stem this increase in the coming quarters.”

    - Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion

    Q3 2024 Mortgage Trends

    Mortgage Lending MetricQ3 2024Q3 2023Q3 2022Q3 2021
    Number of Mortgage
    Loans    		53.4 million52.4 million52.2 million51.2 million
    Consumer-Level
    Delinquency Rate
    (60+ DPD)    		1.22%0.95%0.82%0.73%
    Prior Quarter
    Originations*    		1.2 million1.2 million1.9 million3.5 million
    Average Loan
    Amounts
    of New Mortgage
    Loans*    		$352,727$343,751$342,778$304,127
    Average Balance per
    Consumer    		$263,180$256,858$249,326$233,593
    Total Balances of All
    Mortgage Loans    		$12.3 trillion$11.8 trillion$11.5 trillion$10.5 trillion

    * Originations are viewed one quarter in arrears to account for reporting lag.
    Click here for additional mortgage industry metrics. Click here for a Q3 2024 mortgage industry infographic.

    Monthly car payments stabilize as originations remain flat and delinquency growth slows YoY

    Q3 2024 CIIR Auto Loan Summary

    While affordability remains a challenge, monthly car payments have stabilized after a sustained period of escalation. For Q3 2024, the average monthly new car payment increased by 0.3% to $745. This follows a two-year period from Q3 2021 through Q3 2023 in which new car prices increased by nearly 5%. Monthly used car payments saw a decline YoY from $534 to $526. Originations remain well below historical norms, at 6.4 million for Q2 2024, which is up slightly in year-over-year terms (0.7%). It remains to be seen if the recent interest rate reduction will spur some of those waiting on the sidelines to head over to a dealership. Leasing continues to gain traction after pandemic-era lows. In Q3 2024, leasing accounted for 25% of registrations, up from 17% two years ago. Delinquencies continued to tick up. However, the rate of growth continues to slow. Serious consumer-level delinquency rates (60+ DPD) were at 1.6% in Q3 2024.

    Instant Analysis

    “Despite originations remaining low relative to historical norms, there’s much to be optimistic about when looking to key auto metrics this quarter. Delinquencies, while still increasing, are growing more slowly. However, this does continue to impact loan availability. That said, interest rate declines along with more normal inventory levels and reduced prices could provide relief to consumers in this market. Leasing appears to be gaining popularity again, likely driven in part by the return of dealer incentives. This leasing option, along with the stabilization of monthly payments for new and used cars, will play key roles in solving the affordability challenges faced by many when car shopping.”

    - Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion

    Q3 2024 Auto Loan Trends

    Auto Lending MetricQ3 2024Q3 2023Q3 2022Q3 2021
    Total Auto Loan Accounts80.2 million80.4 million80.2 million82.0 million
    Prior Quarter Originations16.4 million6.3 million6.9 million8.2 million
    Average Monthly Payment NEW2$745$737$707$630
    Average Monthly Payment USED2$526$537$529$476
    Average Balance per Consumer$24,326$23,809$22,642$20,997
    Average Amount Financed on New Auto Loans2$41,480$40,792$41,872$38,686
    Average Amount Financed on Used Auto Loans2$25,960$27,036$28,405$26,265
    Consumer-Level Delinquency Rate (60+ DPD)1.60%1.53%1.29%0.86%

    1Note: Originations are viewed one quarter in arrears to account for reporting lag.
    2Data from S&P Global MobilityAutoCreditInsight, Q3 2024 data only for months of July & August.
    Click here for additional auto industry metrics.

    For more information about the report, please register for the Q3 2024 Credit Industry Insight Report webinar.

    About TransUnion (NYSE: TRU)

    TransUnion is a global information and insights company with over 13,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good® — and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.

    http://www.transunion.com/business

    ContactDave Blumberg
     TransUnion
      
    E-maildblumberg@transunion.com
      
    Telephone312-972-6646
      

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