The newly released Q1 2023 Quarterly Credit Industry Insights
Report (CIIR) from TransUnion (NYSE: TRU) shows that in this
current economic climate in which inflation remains at elevated
levels and interest rates have risen sharply, consumers are
increasingly turning to credit to manage their household budgets,
leading to record- or near-record high balances in credit cards and
unsecured loans.
“We have seen record levels of originations in credit cards and
unsecured personal loans since mid-2021 as strong credit positions
have allowed consumers access to additional products. As inflation
rose to near 40-year high levels, many consumers have used credit
to help manage their budgets, leading to record- or near-record
high balances,” said Michele Raneri, vice president of U.S.
research and consulting at TransUnion. “It remains to be seen
whether these balances will continue to grow in the near-term, or
if growth will slow as consumers moderate their pace of borrowing
and if lenders more closely scrutinize consumers and potential risk
when determining to whom they lend moving forward.”
While down slightly quarter-over-quarter (QoQ) at -1.5%, credit
card balances remain near record highs at $917 billion, which
represents a year-over-year (YoY) increase of almost 20%. Credit
card balances typically experience a seasonal drop in the first
quarter as consumers use tax refunds to pay down debt levels.
Average balance per consumer remains elevated compared to the
previous year, with 14.4% YoY growth.
It is a similar story when looking at unsecured personal loans,
where balances once again reached record highs in Q1 2023. All
told, balances for unsecured personal loans were up 26.3% YoY in Q1
2023 to a new high of $225 billion. It’s worth noting, however,
that this represented the second consecutive quarter of
decelerating YoY growth rates, which may be a sign that lenders are
showing more scrutiny in making underwriting decisions. All risk
tiers demonstrated YoY increases, with each tier seeing
double-digit balance growth. Subprime led with a 40% increase in
balances YoY, followed by super prime at 34%. Prime saw the lowest
growth at just under 20%. The average balance per consumer is the
highest it has been on record (since 2005) at $11,281.
Credit Card and Unsecured Personal Loan
Balances Have Grown YoY
Key Metrics |
Q1 2023 |
Q1 2022 |
YoY% Growth |
Total Credit Card Balances (Bankcard) |
$917 billion |
$769 billion |
19.2% |
Average Credit Card Balance per Consumer |
$5,733 |
$5,010 |
14.4% |
Total Unsecured Personal Loan Balances |
$225 billion |
$192 billion |
26.3% |
Average Unsecured Personal Loan Balance per
Consumer |
$11,281 |
$9,896 |
14.0% |
To learn more about the latest consumer credit trends, register
for the Q1 2023 Quarterly Credit Industry Insights Report
webinar. Read on for more specific insights about credit cards,
personal loans, auto loans and mortgages.
Lenders look towards lower-risk consumers amidst
near-all-time high balances, stable delinquencies
Q1 2023 CIIR Credit Card Summary
Bankcard balances remained near record highs in Q1 2023, landing
at $917 billion. That represents YoY growth of 19.2%. Balances were
down 1.5% QoQ, experiencing the seasonal drop normally seen each
year in the first quarter. Subprime share of consumers with a
balance declined to 10.2%, down from 10.9% the previous quarter,
ending a trend of seven consecutive quarters of growth for the
subprime segment. In contrast, the share of super prime tier
consumers with a balance increased to 41.8%, up from 40.6% a
quarter ago. Millennials continued to see their share of balances
grow, up to 28.6% in Q1 2023 as compared to 26.5% one year prior.
Total credit lines increased 9.7% and reached $4.4 trillion in Q1
2023, an increase of $391 billion YoY. High growth in credit lines
was observed across the risk spectrum, but 60% of the increase was
driven by super prime borrowers. 2022 Q4 new account originations
were 20.64 million accounts, representing a decline of -3.9% YoY
and -4.3% QoQ. Most of the impact was driven by a decline in
subprime originations of -19% YoY. Bankcard 90+ DPD consumer-level
delinquency remained flat QoQ at 2.26% but remains up significantly
from levels seen in the first quarter of 2022.
Instant
Analysis
“Bankcard balances continued to grow as
borrowers gained greater access to credit and subsequently
leveraged that available credit. While bankcard originations were
down slightly YoY and QoQ, they still topped 20 million for the
fifth time over the course of the past six quarters. 90+ DPD
delinquency rates by accounts were relatively flat among all risk
tiers with the exception being subprime, which were at 12.42%, up
from 9.44% a year ago.”
- Paul Siegfried, senior vice president
and credit card business leader at TransUnion
Q1 2023 Credit Card Trends
Credit Card Lending Metric (Bankcard) |
Q1 2023 |
Q1 2022 |
Q1 2021 |
Q1 2020 |
Number of Credit Cards |
523.2 million |
492.5 million |
456.7 million |
459.6 million |
Borrower-Level Delinquency Rate (90+ DPD) |
2.26% |
1.61% |
1.27% |
1.98% |
Total Credit Card Balances |
$917 billion |
$769 billion |
$688 billion |
$814 billion |
Average Debt Per Borrower |
$5,733 |
$5,010 |
$4,784 |
$5,637 |
Number of Consumers with a Credit Card
Account |
165.3 million |
159.5 million |
150.4 million |
151.1 million |
Prior Quarter Originations* |
20.6 million |
21.5 million |
15.5 million |
18.9 million |
Average New Account Credit Lines* |
$5,421 |
$5,226 |
$5,021 |
$5,035 |
*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.
Unsecured personal loan balances once again reach record
of $225B, but growth is slowing
Q1 2023 CIIR Personal Loan Summary
As interest rates continued to climb and delinquencies remained
elevated, lenders continued to tighten their lending criteria and
focus more on lower-risk consumers, resulting in YoY declines of 9%
in Q4 originations and decelerating YoY increases in total
unsecured personal loan balances. It is important to note that
originations a year ago were at record highs, so while growth has
slowed, Q4 2022 originations were still strong, on par with Q4 2019
levels (a record high pre-COVID). Unsecured personal loan balances
were up 26.3%, but it was the 2nd consecutive quarter of lower YoY
growth rates. The YoY decline in originations was largely driven by
the prime and below-risk tiers, all of which demonstrated negative
YoY growth. Subprime borrowers experienced the most significant
decline, down 18.2% YoY. Balances grew YoY across all risk tiers,
with each risk tier seeing double-digit balance growth as the
market continued to expand following record growth starting in
mid-2021 through 2022. Subprime saw the highest growth in balances
at 40%, while prime plus saw the slowest growth in balances at just
below 20%. The average balance per consumer in Q1 2023 rose to its
highest level on record, up to $11,281. The average size of new
accounts increased by nearly 11% YoY to $7,368. Borrower-level 60+
DPD delinquencies increased in Q1 2023 to 3.91%, a 20.5% increase
over the prior year, although it did represent a 5.4% decrease from
the prior quarter.
Instant Analysis
“Following growing delinquencies in 2022, lenders continued to
adjust their underwriting practices, and balance growth in Q1 2023
slowed as a result of lower originations in Q4 2022. Delinquencies
actually fell in Q1 2023 from the prior quarter, indicating that
these adjustments have had an impact. As investors will continue to
express a preference for lower risk, shorter duration loans,
unsecured personal loans will be appealing assets, but the shift
towards lower risk consumers will be apparent. In response to
limited funding, expect lenders to focus on retaining existing
borrowers to keep their cost of acquisition low and to limit risk
by increasingly working with known borrowers with a good track
record.”
- Liz Pagel, senior vice president of consumer
lending at TransUnion
Q1 2023 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q1 2023 |
Q1 2022 |
Q1 2021 |
Q1 2020 |
Total Balances |
$225 billion |
$178 billion |
$144 billion |
$159 billion |
Number of Unsecured Personal Loans |
26.9 million |
23.9 million |
20.8 million |
23.5 million |
Number of Consumers with Unsecured Personal
Loans |
22.4 million |
20.4 million |
19.0 million |
20.9 million |
Borrower-Level Delinquency Rate (60+ DPD) |
3.91% |
3.25% |
2.68% |
3.41% |
Average Debt Per Borrower |
$11,281 |
$9,896 |
$8,817 |
$8,820 |
Prior Quarter Originations* |
5.2 million |
5.7 million |
4.2 million |
5.2 million |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.Click here for additional unsecured personal loan
industry metrics. Click here for a Q1 2023 unsecured personal loan
infographic.
Mortgage balances at record highs while originations
near record lows
Q1 2023 CIIR Mortgage Loan Summary
While total mortgage balances reached a record level of $11.8T
in Q1 2023, the slowdown in mortgage originations continued to
accelerate, down from 2.9M in Q4 2021 to 1M in Q4 2022,
representing a 65% YoY drop – the largest decline since TransUnion
has been tracking. Within originations, purchases made up 86% of
the volume in Q4 2022 with 900,000 originations (down by 45% YoY
from 1.6M in Q4 2021). Refinance originations fell by 89% YoY from
1.3M to 143,000, the lowest level to date. This was driven by the
dramatic decrease of rate and term refinances, which were down by
96% YoY from 588K in Q4 2021 to 24K in Q4 2022, and cash-out
refinance originations, which were down by 83% YoY from 716K to
120K. Conversely, HELOC originations were up 7% YoY to reach 299K
in Q4 2022, while home equity loan originations grew 31% YoY to
264K. Mortgage delinquencies ticked up YoY, with account-level
delinquency (60+ days past due) growing 12% to 0.98% in Q1 2023,
though still remaining at very low levels historically.
Instant Analysis
“The relatively higher interest rate environment has depressed
mortgage refinancing in particular. Interestingly, cash-out
refinance hasn’t been as impacted as rate and term refinance. This,
coupled with the increases observed in HELOC and home equity loan
originations, indicates that homeowners are still interested in
tapping their home equity, even at higher interest rates. It is
also encouraging that purchase originations remain near the lower
end of the normal activity range, indicating that consumers are
continuing to purchase homes even in this higher-rate environment.
While delinquency levels remain below historical norms, this marks
the fourth consecutive quarter of increase– a trend worthy of
continued monitoring in 2023 as macroeconomic volatility and
increased cost-of-living may be starting to affect
delinquencies.”
- Joe Mellman, senior vice president and mortgage
business leader at TransUnion
Q1 2023 Mortgage Trends
Mortgage Lending Metric |
Q1 2023 |
Q1 2022 |
Q1 2021 |
Q1 2020 |
Number of Mortgage Loans |
52.9 million |
51.5 million |
50.9 million |
50.7 million |
Account-Level Delinquency Rate (60+ DPD) |
0.98% |
0.87% |
0.99% |
1.48% |
Prior Quarter Originations* |
1.0 million |
2.9 million |
4.0 million |
2.3 million |
Mortgage Origination* Distribution – Purchase |
86% |
56% |
47% |
57% |
Mortgage Origination* Distribution –
Refinance |
14% |
44% |
53% |
43% |
Average Balanceof New Mortgage
Loans* |
$328,925 |
$317,388 |
$294,411 |
$292,754 |
Total Balances of All Mortgage Loans |
$11.8 trillion |
$10.9 trillion |
$10.0 trillion |
$9.5 trillion |
Number of HELOC Originations* |
298,694 |
278,230 |
212,303 |
275,854 |
Number of Home Equity loan Originations* |
263,728 |
201,381 |
177,911 |
181,598 |
* Originations are viewed one quarter in arrears to account
for reporting lag.Click here for additional mortgage industry
metrics. Click here for a Q1 2023 mortgage infographic.
As inventories begin to replenish, all eyes on vintage
performance
Q1 2023 CIIR Auto Loan Summary
Originations in Q4 2022 were down 9.7% YoY to 5.9 million. This
represents the lowest level since Q4 2013. Originations were down
across all risk tiers, with all tiers seeing decreases of between
10 and 13% YoY, with the exception of super prime, which is down
only 1%. When compared to the pre-pandemic Q4 2019, originations
were down across all risk tiers, with subprime (-17.8%) and super
prime (-15.9%) leading the way. The new vs. used split remains
steady, with used cars making up 60% of all car purchases in Q1
2023. Leasing continues to lag, only accounting for 18% of new
vehicle registrations, down from 20% YoY. The average amount
financed for new vehicles was up 3.4% YoY, while the average amount
financed for used vehicles was down 2.6% YoY. Monthly payments were
up YoY for both new cars (+11.9%) and used cars (+3.9%). The
account-level 60+ DPD delinquency rate rose to 1.69%, up from 1.43%
YoY. Vintage performance, which reflects the performance of an
account in different periods of time after the loan was granted,
continues to show relatively strong results, with new vintages
remaining at pandemic-era lows and performing better than
pre-pandemic.
Instant Analysis
“Driven by lower inventories and higher interest rates,
originations remain down from the same quarter one year ago.
However, as production begins to catch up to demand, there is hope
that this trend will reverse course soon, at least among new cars.
The used market is expected to remain tight, as the lower level of
new car sales starting in 2020 means fewer recent model-year used
cards available. Affordability remains a central issue for
consumers, especially those below prime. We continue to pay close
attention to delinquencies but continue to see positive signs among
vintage data.”
- Satyan Merchant, senior vice president and automotive
business leader at TransUnion
Q1 2023 Auto Loan Trends
Auto Lending Metric |
Q1 2023 |
Q1 2022 |
Q1 2021 |
Q1 2020 |
Total Auto Loan Accounts |
81,098,527 |
81,520,660 |
83,268,376 |
83,755,038 |
Account-Level Delinquency Rate (60+ DPD) |
1.69% |
1.43% |
1.33% |
1.18% |
Prior Quarter Originations* |
5,870,012 |
6,497,371 |
6,699,850 |
6,881,794 |
Average Monthly Payment NEW** |
$736 |
$655 |
$585 |
$575 |
Average Monthly Payment USED** |
$523 |
$508 |
$413 |
$395 |
Average Amount Financed on New Auto Loans** |
$41,503 |
$40,196 |
$36,214 |
$34,731 |
Average Amount Financed on Used Auto Loans** |
$26,560 |
$27,761 |
$22,118 |
$20,439 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.**Data from S&P Global
MobilityAutoCreditInsight, Q1 2023 data only for months of January
& FebruaryClick here for additional auto industry metrics.
For more information about the report, please register for
the Q1 2023 Credit Industry Insight Report webinar.
About TransUnion (NYSE:TRU)
TransUnion is a global information and insights company with
over 12,000 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
Contact |
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TransUnion |
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E-mail |
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dblumberg@transunion.com |
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