Amidst an economic environment of rising interest rates and high
inflation, the fourth quarter of 2022 saw consumers continuing to
look to credit as a means to help stave off these financial
pressures. TransUnion’s (NYSE: TRU) newly released Q4 2022
Quarterly Credit Industry Insights Report (CIIR) shows that whether
it’s Gen Z consumers opening credit cards, homeowners taking out
home equity lines of credit (HELOCs) or consumers continuing to
turn to unsecured personal loans, more and more borrowers are
looking to a range of credit products to cope with the financial
pressures of today and better position themselves for the evolving
financial landscape.
“Whether it’s shopping for a new car or buying eggs in the
grocery store, consumers continue to be impacted in ways big and
small by both high inflation and the interest rate hikes
implemented by the Federal Reserve, which we anticipate may
continue for at least a few more months,” said Michele Raneri, vice
president of U.S. research and consulting at TransUnion. “If more
moderated rate hikes continue, it would be a good sign that the
increases have been working, and that some relief from high
inflation may be on the horizon. Until then, we fully expect
consumers to continue to look to credit products such as credit
cards, HELOCs and unsecured personal loans to help make ends meet
and put themselves in stronger financial standing moving
forward.”
An example of increased credit usage: credit card balances
continued to grow, reaching record levels at the end of 2022.
Bankcard originations were also up year-over-year (YoY) in Q3 2022
(the most recent originations data available), from 20.1 million in
Q3 2021 to 21.6 million. Gen Z consumers, in particular,
increasingly continued to turn to bankcards, showing YoY growth in
both balances (up 64% YoY in Q4 2022) and originations (up 18.8%
YoY in Q3 2022). Somewhat concerning is an upward trend in credit
card delinquencies in both bankcard and private-label; however,
context is required. Delinquencies for bankcards in Q4 2022 are
still hovering around pre-pandemic levels observed in 2019 while
private label card delinquencies remain below pre-pandemic
levels.
While higher interest rates dampened new and refinance mortgage
originations in Q3 2022, homeowners continued eagerly tapping into
their record stores of home equity to help in consolidating their
high interest debt. In fact, the most recent origination figures
from Q3 2022 show that HELOCs and home equity loans (HELOANs)
continued to be a popular option in Q3 2022. Consumers are also
still seeking out unsecured personal loans as a way to pay off high
interest debt and, despite growing delinquency rates among
borrowers, lenders remain eager to lend, albeit seemingly with
adjustments in their lending criteria that includes a gradual shift
away from below prime borrowers.
Consumers Turned to Credit Cards, HELOCs
and Unsecured Personal Loans in 2022
Key Metrics |
Q4 2022 |
Q4 2021 |
Total Credit Card Balances (Bankcard) |
$930 billion |
$785 billion |
Number of Credit Cards (Bankcard) |
518.4 million |
485.9 million |
Number of HELOC Originations (Q3 2022)* |
405,646 |
286,925 |
Total Unsecured Personal Loan Balances |
$222 billion |
$167 billion |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
To learn more about the latest consumer credit trends, register
for the Q4 2022 Quarterly Credit Industry Insights Report
Webinar. Read on for more specific insights about credit cards,
personal loans, auto loans and mortgages.
With Gen Z increasingly turning to bankcards, balances
once again reach record highs
Q4 2022 CIIR Credit Card Summary
Bankcard balances increased to a new record high in Q4 2022 at
$931 billion, representing 18.5% growth YoY. Average bankcard
account balances remain on an upward trend in 2022 with
quarter-over-quarter (QoQ) growth led by subprime (19.0%) and near
prime (13.8%). Total private label balances increased to $131
billion in Q4 2022, which represents YoY growth of 8%. Subprime
private label total balances grew 33% YoY as subprime share of
balances has increased. A new record was set for bankcard
originations, increasing to 21.6 million in Q3 2022, which
represents growth of 7.4% YoY, and which has resulted in more
consumers, 202 million, having access to credit cards. Q3 2022 saw
another quarter in which Gen Z saw significant increases in their
rate of bankcard originations, up 18.8% YoY. Total bankcard credit
lines grew 9.2% YoY over the course of 2022, reaching $4.3 trillion
in Q4 2022, while total utilization grew 8.2% YoY to 21.5%, the
highest utilization in past two years. Total private label credit
lines saw positive growth in Q4 2022, with the total private label
utilization hitting a record high this quarter. Bankcards saw an
increase in delinquencies, with the 90+ day delinquency rate
increasing to 2.26% in Q4 2022, which is 0.07% higher than Q4
2019.
Instant Analysis
“Bankcard balances and originations continue to
climb as consumers seek ways to cope with inflation, and this is
particularly the case among Gen Z consumers, who have seen growth
of 19% in originations YoY and 64% in balances over the same
period. It’s important to view this growth in delinquency in the
context of where we stood pre-pandemic. In fact, despite recent
increases, bankcard delinquencies have only just reached the level
they were at prior to the pandemic, while private label card
delinquencies remain 17% lower than their pre-pandemic levels. The
use of tools such as trended data can help lenders find the right
consumers to whom to extend and manage credit despite the
challenges of the current environment.”
- Paul Siegfried, senior vice president
and credit card business leader at TransUnion
Q4 2022 Credit Card Trends
Credit Card Lending Metric (Bankcard) |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Q4 2019 |
Number of Credit Cards |
518.4 million |
485.9 million |
454.9 million |
456.8 million |
Borrower-Level Delinquency Rate (90+ DPD) |
2.26% |
1.48% |
1.30% |
2.19% |
Total Credit Card Balances |
$930 billion |
$785 billion |
$740 billion |
$846 billion |
Average Debt Per Borrower |
$5,805 |
$5,127 |
$5,103 |
$5,818 |
Number of Consumers with a Credit Card
Account |
166.0 million |
159.5 million |
151.8 million |
152.6 million |
Prior Quarter Originations* |
21.6 million |
20.1 million |
12.3 million |
18.7 million |
Average New Account Credit Lines* |
$5,226 |
$4,468 |
$3,820 |
$5,221 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.Click here to view findings from our recent
study, Empowering Credit Inclusion: A Deeper Perspective on
New-to-Credit Consumers.
As unsecured personal loan balances reach record $222B,
originations return to pre-pandemic levels
Q4 2022 CIIR Personal Loan Summary
Despite the rate of growth slowing in the second half of 2022,
unsecured personal loan balances climbed to a record $222 billion
in Q4 2022. This was driven by record high originations in the
first half of the year. While balances grew across all risk tiers,
below-prime tiers led the way with YoY growth of 60.4% for subprime
and 38.7% for near prime. Total new account balances grew 25.8% YoY
to reach $38.3 billion. A record 22.5 million consumers currently
have at least one unsecured personal loan, a 12.9% YoY increase.
Originations in Q3 2022 (viewed one quarter in arrears) were at 5.6
million, which represented YoY growth of 9.2%, similar to the
pre-pandemic (Q3 2019) growth rate of 9.7%, but far behind the
growth seen in the first half of the year. Evidence of a lender
pull-back is beginning to show in Q3 2022 as originations shrank
6.6% QoQ despite Q3 typically being stronger than Q2. Q4 2022 is
expected to see further pull-back. Delinquencies once again
increased, with serious borrower delinquency (60+ days past due)
increasing for the sixth consecutive quarter in Q4 2022 to 4.14% --
the highest level seen since Q4 2011. This represents a 38%
increase YoY. The increase is in part due to the unprecedented
growth seen in the first half of the year, which caused lenders to
compete and grow business in riskier borrower tiers. Subprime
delinquencies rose 25% YoY in contrast to super prime, which fell
21% YoY.
Instant Analysis
“Balances in unsecured personal loans grew an impressive 32% in
2023, despite slower growth in the back half of the year.
Unprecedented origination growth and buy box expansion began in
late 2021 and continued through Q2 2022. In Q3 2022, lenders began
to slow their growth and shift their focus to lower-risk borrowers.
On a percentage basis, personal loan originations for subprime and
near prime borrowers increased in the single digits YoY whereas
super prime borrowers experienced a 33% rise in the third quarter.
Some of the growth from earlier in the year is leading to rising
delinquency rates among below prime consumers in recent vintages,
which is likely to continue. Against this backdrop, lenders are
likely to continue adjusting lending criteria to grow slowly in the
upcoming quarter.”
- Liz Pagel, senior vice president of consumer lending
at TransUnion
Q4 2022 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Q4 2019 |
Total Balances |
$222 billion |
$167 billion |
$145 billion |
$157 billion |
Number of Unsecured Personal Loans |
27.0 million |
22.8 million |
21.2 million |
23.3 million |
Number of Consumers with Unsecured Personal
Loans |
22.5 million |
19.9 million |
19.3 million |
20.8 million |
Borrower-Level Delinquency Rate (60+ DPD) |
4.14% |
3.00% |
2.70% |
3.48% |
Average Debt Per Borrower |
$11,116 |
$9,622 |
$8,795 |
$8,780 |
Prior Quarter Originations* |
5.6 million |
5.1 million |
3.5 million |
5.0 million |
Average Balance of New Unsecured Personal
Loans* |
$8,018 |
$7,104 |
$5,739 |
$6,211 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.Click here to view our recent study, Where Will
Growth in Mortgage Originations Come From?
HELOCs and HELOANs continue to grow as homeowners tap
into record levels of home equity
Q4 2022 CIIR Mortgage Loan Summary
Mortgage originations continued their slowdown in the face of
higher interest rates, with the most recent quarter of data, Q3
2022, showing a 56% decrease YoY in overall originations, down to
1.5M from 3.4M in Q3 2021. For the sixth consecutive quarter, new
purchases made up the bulk of total origination volume in Q3 2022,
up 28 percentage points from 55% in Q3 2021 to 83%, outnumbering
refinance five to one for the quarter with volumes on par with
pre-pandemic levels (1.2M). Overall refinance originations fell by
84% YoY to 250,000; the lowest on record – driven primarily by the
dramatic decrease of rate-and-term refinances, down by 95% YoY to
40,000. Total mortgage balances reached a record level in Q4 2022
of $11.7 trillion, 9% higher than the same period last year. The
annual growth rate of tappable homeowner equity continues to
increase, up by 18% YoY in Q3 2022, reaching an all-time high of
$20.2 trillion. This represents an increase of $600 billion from Q2
2022. HELOCs were up 41% YoY in Q3 2022, while Home Equity loan
originations grew 47% YoY in 2022, representing the most Home
Equity loan originations on record since 2010. Delinquencies ticked
up, with borrower delinquency (60+ days past due) growing 17% YoY
to 0.96% in Q4 2022. While delinquency levels remain low, this
marks the third consecutive quarter of increase.
Instant Analysis
“HELOCs and Home Equity Loans continue to grow at unprecedented
levels as homeowners increasingly take advantage of the record
levels of tappable home equity they have built in their homes. The
main reasons why homeowners utilize the equity available to them is
to consolidate debt, home improvement and big ticket purchases.
Lenders who will benefit from this trend are those who have the
ability to identify and reach homeowners who have equity available
to tap and who also, either carry high interest rate debt that can
be consolidated or own older homes that may warrant improvements.
Leveraging data and analytics from companies like TransUnion that
have all this data could result in realized benefits for homeowners
(through reduced monthly costs) as well as lenders (through
cross-sell conversion and portfolio growth).”
- Joe Mellman, senior vice president and mortgage
business leader at TransUnion
Q4 2022 Mortgage Trends
Mortgage Lending Metric |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Q4 2019 |
Number of Mortgage Loans |
52.6 million |
51.2 million |
50.7 million |
50.3 million |
Account-Level Delinquency Rate (60+ DPD) |
0.96% |
0.82% |
1.04% |
1.64% |
Prior Quarter Originations* |
1.5 million |
3.4 million |
3.9 million |
2.3 million |
Mortgage Origination* Distribution – Purchase |
83% |
55% |
48% |
62% |
Mortgage Origination* Distribution –
Refinance |
17% |
45% |
52% |
38% |
Average Mortgage Balance per Consumer |
252,212 |
237,393 |
222,003 |
213,858 |
Average Balanceof New Mortgage
Loans* |
$334,339 |
$311,631 |
$296,506 |
$286,913 |
Total Balances of All Mortgage Loans |
$11.7 trillion |
$10.7 trillion |
$9.9 trillion |
$9.4 trillion |
Number of HELOC Originations* |
405,646 |
286,925 |
235,896 |
295,746 |
Number of Home Equity loan Originations* |
322,537 |
220,144 |
197,767 |
201,332 |
* Originations are viewed one quarter in arrears to account
for reporting lag.
Despite lower auto prices, higher interest rates driving
higher monthly auto payments
Q4 2022 CIIR Auto Loan Summary
Originations in Q3 2022 were down 9.8% YoY to 6.6 million,
representing the lowest seasonal volume since 2013. This has
represented the second consecutive year that Q3, which typically
represents the highest volume quarter in-year, has trailed Q2.
However, in a sign that post-pandemic new vehicle supply shortages
may be easing – for the first time since 2021 – new vehicles
comprised more than 40% of vehicles financed in Q4 2022. Leasing,
however, continues to lag. In Q4, leasing represented 20.9% of all
new vehicle registrations, down from 24.7% in Q4 2021. Despite
slight decreases in average amounts financed for both new and used
cars, monthly payments continued to grow in Q4 2022, albeit more
slowly than one year prior. Point-in-time serious account
delinquency (60+ days past due) rates rose 13bps quarter over
quarter to 1.78% in Q4 2022, which is slightly higher than the
typical seasonal increase of ~7bps from Q3 to Q4. While new vintage
performance shows stable performance, we are seeing some
deterioration on used vehicle vintages when comparing to
pre-pandemic cohorts.
Instant Analysis
“The fact that new vehicles made up more than 40% of all cars
financed this quarter for the first time since the end of 2021 is a
sign that the new vehicle inventories are improving from
significant supply shortages earlier in the year. However, despite
a decrease in the average amount financed for both used and new
cars, inflation and rising interest rates continue to impact
consumer affordability, with monthly payments for both new and used
vehicles continuing to rise, albeit more slowly. While
point-in-time delinquency rates continue to rise, context is
important when reviewing auto delinquency figures. Recent vintages
show deterioration for used vehicle financing while new financing
performance remains stable.”
- Satyan Merchant, senior vice president and automotive
business leader at TransUnion
Q4 2022 Auto Loan Trends
Auto Lending Metric |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Q4 2019 |
Total Auto Loan Accounts |
81.2 million |
82.4 million |
83.5 million |
83.8 million |
Account-Level Delinquency Rate (60+ DPD) |
1.78% |
1.40% |
1.37% |
1.29% |
Prior Quarter Originations* |
6.6 million |
7.3 million |
7.3 million |
7.5 million |
Average Monthly Payment NEW** |
$718 |
$654 |
$586 |
$566 |
Average Monthly Payment USED** |
$530 |
$493 |
$413 |
$395 |
Average Amount Financedon New Auto
Loans** |
$41,590 |
$40,502 |
$36,253 |
$33,982 |
Average Amount Financedon Used Auto
Loans** |
$27,664 |
$27,184 |
$22,270 |
$20,528 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.**Data from S&P Global
MobilityAutoCreditInsight, Q4 2022 data only for months of October
& DecemberClick here to view findings from our recent study,
Trends in Auto Financing: The State of Leasing.
Credit Industry Indicator ticks down, driven by higher
delinquencies and slowing credit demand
Q4 2022 Credit Industry Indicator Summary
TransUnion’s Credit Industry Indicator (CII) fell to 110 in Q4
2022, a YoY drop of 5 points from the Q4 2021 reading and a
sequential drop of 10 points from the previous quarter level in Q3
2022. The CII is a quarterly measure of depersonalized and
aggregated consumer credit health trends that summarizes movements
in credit demand, credit supply, consumer credit behaviors and
credit performance metrics over time into a single indicator.
Examples of data elements categorized into these four pillars
include: new product openings, consumer credit scores, outstanding
balances, payment behaviors, and 100+ other variables. Increases in
the CII level indicate overall positive trends in the health of the
credit market.
The Q4 2022 decrease in the CII was largely driven by cooling
demand for new credit, especially mortgages, and rising
delinquencies across many product categories, particularly
unsecured credit products, from the record lows seen in 2021. These
factors offset the positive developments seen in the credit market,
including continued growth in originations of new credit cards and
unsecured personal loans, higher credit participation (number of
consumers with access to credit) and overall balance growth across
products. Despite the recent quarter dip, the CII remains well
above levels seen at the height of the pandemic in 2020 and early
2021.
Instant Analysis
“While a single indicator number can’t fully reflect all the
complexities of the consumer credit market, the CII was developed
to create an overall barometer of how the market is trending. The
dip in the most recent quarter indicates that the market is
starting to see some headwinds, particularly around delinquencies.
However, the continued supply of new credit to consumers in recent
quarters, especially at a time when many consumers are feeling the
effects of high inflation levels, is one of several factors showing
that, overall, the consumer credit market remains healthy.”
- Charlie Wise, senior vice president and head of global
research and consulting at TransUnion
For more information about the report, please register for
the Q4 2022 Credit Industry Insight Report webinar.
About TransUnion (NYSE: TRU)TransUnion is a
global information and insights company that makes trust possible
in the modern economy. We do this by providing an
actionable picture of each person so they can be reliably
represented in the marketplace. As a result, businesses and
consumers can transact with confidence and achieve great things. We
call this Information for Good®.
A leading presence in more than 30 countries across five
continents, TransUnion provides solutions that help create economic
opportunity, great experiences and personal empowerment for
hundreds of millions of people.
http://www.transunion.com/business
Contact |
Dave
Blumberg |
|
TransUnion |
|
|
E-mail |
dblumberg@transunion.com |
|
|
Telephone |
312-972-6646 |
TransUnion (NYSE:TRU)
Historical Stock Chart
Von Mär 2024 bis Apr 2024
TransUnion (NYSE:TRU)
Historical Stock Chart
Von Apr 2023 bis Apr 2024