High interest rates and higher-than-expected costs for goods and
services continue to squeeze the wallets of American consumers.
This has led to many continuing to leverage their existing credit
account lines more than ever. At the same time, affordability
challenges for homes and automobiles, as well as growing concerns
over rising debt service costs, have resulted in consumers opening
fewer new credit accounts. These findings were revealed in the
newly released Q3 2023 Quarterly Credit Industry Insights Report
(CIIR) from TransUnion (NYSE: TRU).
Bankcard balances increased 15% year-over-year (YoY) to set a
new record at $995 billion at the end of Q3 2023, up from $866
billion one year prior. Of particular note is the balance share of
Millennials, which now has surpassed that of Baby Boomers as the
second greatest balance share of any generation, only behind Gen X.
The average balance per consumer also increased by double-digits
YoY, up 11%, to $6,088. This represents the highest average balance
per consumer in the last 10 years.
“Inflation has abated to a large extent in recent months, but
its elevated levels in 2021 – 2022 have left overall prices
sharply higher across a wide range of products and services – not
just discretionary spend categories, but everyday items that
consumers rely on,” said Charlie Wise, senior vice president of
global research and consulting at TransUnion. “As a result,
consumers have increasingly turned to their existing available
credit lines. It will be worth watching how those balances are
further impacted as some consumers begin feeling the pinch of the
resumption of student loan payments.”
Conversely, while balances across many credit products are
higher YoY, originations for those same credit products lagged
behind the levels that they were at one year ago. Mortgage
originations lead the decline, down nearly 37% YoY, as potential
home buyers continued to hold-off in the face of high interest
rates and home prices, which show no sign of dropping in the near
future, and the refinance market remains on the sidelines for now.
Unsecured personal loan originations were also down significantly
YoY from the record levels in 2022, down nearly 15%, as lenders
have increasingly focused on less risky credit tiers when
considering new unsecured personal loan originations.
Balances Were Up While Originations Were
Down Across Credit Products YoY
Key Metrics |
Q3 2023 |
Q3 2022 |
YoY% Change |
Total Credit Card Balances (Bankcard) |
$995 billion |
$866 billion |
15.0% |
Total Mortgage Balances |
$11.8 trillion |
$11.5 trillion |
3.2% |
Total Auto Balances |
$1.6 trillion |
$1.5 trillion |
5.2% |
Total Unsecured Personal Loan Balances |
$241 billion |
$210 billion |
14.8% |
|
Q2 2023 |
Q2 2022 |
YoY% Change |
Total Credit Card
Originations1 (Bankcard) |
20.5 million |
21.3 million |
-3.8% |
Total Mortgage Originations1 |
1.2 million |
1.9 million |
-36.5% |
Total Auto Originations1,2 |
6.3 million |
6.9 million |
-8.7% |
Total Unsecured Personal Loan
Originations1 |
5.1 million |
6.0 million |
-14.5% |
1Note: Originations are viewed one quarter in arrears to account
for reporting lag.2TU discovered irregularities from a data
contributor, and that data has been removed from our market
reporting until resolution.
The report also found lenders have continued to look to less
risky credit tiers when considering new originations, in response
to rising delinquencies for unsecured products that began in
mid-2021. For instance, among bankcard originations in Q2 2023, the
super prime share was 22.5%, up from 18.6% in Q2 2022. This stands
in contrast to the subprime segment share, which fell from 24.1% in
Q2 2022 to 20.7% in Q2 2023. A similar story can be seen when
looking at unsecured personal loans, where subprime’s share of
originations in Q2 2023 fell to 36%, down from 39.5% one year
prior, while super prime (7.9%, up from 5.6%) and prime plus
(11.6%, up from 10.4%) both grew over the same period.
To learn more about the latest consumer credit trends, register
for the Q3 2023 Quarterly Credit Industry Insights Report
webinar. Read on for more specific insights about credit cards,
personal loans, auto loans and mortgages.
Bankcard balances reach a new record while balance-level
delinquencies rise
Q3 2023 CIIR Credit Card Summary
Bankcard originations saw their second highest Q2 ever in Q2
2023 with 20.5 million new accounts, representing a decline of 3.8%
YoY from the record levels in 2022. This decline was primarily
driven by lower originations in prime and below segments. Total
bankcard balances reached a new record of $995 billion in Q3 2023,
which represented YoY growth of 15%. The average bankcard balance
per consumer increased 11% YoY to $6,088, the highest in the last
10 years. Total bankcard credit lines increased 9% YoY to $4.6T
while the average credit line per consumer has surpassed the $25K
mark. Average bankcard utilization per consumer in Q3 2023 stood at
24.1%, below the Q3 2019 pre-pandemic level of 24.6%. 90 or more
days-past-due (DPD) balance-level delinquency saw an increase of
65bps YoY to 1.91%, 30bps higher than the pre-pandemic Q3 2019.
Instant Analysis
“Q2 2023 showed another historically strong
quarter for bankcard originations, though lower than last year’s
record level, as lender acquisition strategies shifted away from
below prime originations for the third consecutive quarter. In
contrast, the bankcard origination share for prime plus and super
prime are up from one year ago, indicating a shift by lenders to
focus on acquiring lower risk new accounts. Despite the
year-over-year drop, near-record origination levels show that card
issuers have continued to meet the demand of credit-seeking
borrowers. While still reflecting some familiar seasonal patterns,
balance-level bankcard 90+ DPD delinquency now stands at its
highest level over the past decade, and bears continued
monitoring.”
– Paul Siegfried, senior vice
president and credit card business leader at
TransUnion
Q3 2023 Credit Card Trends
Credit Card Lending Metric (Bankcard) |
Q3 2023 |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Number of Credit Cards |
537.9 million |
510.8 million |
474.2 million |
451.9 million |
Borrower-Level Delinquency Rate (90+ DPD) |
2.34% |
1.94% |
1.13% |
1.23% |
Total Credit Card Balances |
$995 billion |
$866 billion |
$727 billion |
$723 billion |
Average Debt Per Borrower |
$6,088 |
$5,474 |
$4,857 |
$5,068 |
Number of Consumers Carrying a Balance |
168.6 million |
163.9 million |
156.1 million |
149.4 million |
Prior Quarter Originations* |
20.5 million |
21.3 million |
19.3 million |
8.6 million |
Average New Account Credit Lines* |
$5,777 |
$5,021 |
$4,200 |
$4,001 |
*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 2023 credit card infographic.
Super prime leads unsecured personal loan balance growth
as delinquencies tick down
Q3 2023 CIIR Personal Loan Summary
Total unsecured loan balances set a new record for the 8th
consecutive quarter, growing to $241 billion in Q3 2023,
representing YoY growth of nearly 15%. Super prime experienced the
most significant YoY balance growth of 38.6%, followed by subprime
and prime plus at 15% and 14%, respectively. Total new account
balances in Q2 2022 were at $35 billion, down 13% YoY. Only the
super prime risk tier grew YoY (22%). The average balance per
consumer grew nearly 9% YoY to $11,692, another record high, and
the number of consumers with a balance grew to 23 million in Q3
2023, a YoY increase of 5%. On the origination front, Q2 2023
marked the third consecutive quarter of YoY decline (15%); however,
this level remained 6% higher than pre-pandemic Q2 2019. All risk
tiers saw YoY declines except for super prime, which grew nearly
20%. Borrower-level 60+ DPD delinquency was 3.8% in Q3 2023, down
from 3.9% a year prior. On a vintage basis, delinquencies for below
prime vintages for Q3 2022 originations after 12 months have
stabilized compared to 12-month performance for the Q3 2021
origination cohorts, while delinquencies for prime and above
vintages originated in Q3 2022 are elevated over the prior
year.
Instant Analysis
“Although originations continue to fall from 2022’s record
levels, total unsecured loan balances and consumer-level balances
still reached records, driven primarily by super prime consumers,
representing a continued shift by lenders towards less risky
borrowers. While originations in Q2 2023 were down 14.5% from last
year, they remain elevated compared to the pre-pandemic period,
demonstrating continued demand in this market. 60+ DPD
delinquencies saw their first year-over-year decline in
borrower-level delinquency in over a year, led by improvement in
the performance of originations by below prime borrowers. This is
something worth watching in the months to come as we look for
potential impacts of the restarting of student loan payments for
millions of borrowers. Lenders should continue to find
opportunities given strong employment rates and a continued desire
by consumers to refinance higher interest card debt.”
– Liz Pagel, senior vice president of consumer
lending at TransUnion
Q3 2023 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q3 2023 |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Total Balances |
$241 billion |
$210 billion |
$156 billion |
$148 billion |
Number of Unsecured Personal Loans |
27.8 million |
26.4 million |
21.6 million |
21.4 million |
Number of Consumers with Unsecured Personal
Loans |
23.2 million |
22.0 million |
19.2 million |
19.5 million |
Borrower-Level Delinquency Rate (60+ DPD) |
3.75% |
3.89% |
2.52% |
2.55% |
Average Debt Per Borrower |
$11,692 |
$10,749 |
$9,387 |
$8,864 |
Prior Quarter Originations* |
5.1 million |
6.0 million |
4.4 million |
2.6 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 Q3 2023 unsecured personal loan
infographic.
Mortgage balances inch higher while delinquencies
continue to trend up
Q3 2023 CIIR Mortgage Loan Summary
After falling slightly last quarter to $11.7T, total mortgage
balances increased to $11.8T in Q3 2023. This represents an
increase of 3% YoY. Mortgage originations were down 37% YoY,
falling to 1.2 million, comparable to volumes last seen in Q2 2014.
Purchases made up 87% of the volume in Q2 2023, at 1.0 million
originations, down 28% YoY from 1.2 million in Q2 2022. Refinance
was down 64% YoY from 425K to 151K, with rate and term and cash-out
refinance originations falling 63% and 65% YoY respectively.
Tappable homeowner equity continued to inch upward, up 1% YoY to
$19.7T. HELOC originations were down 28% from last year’s high
volumes, and Home Equity loan originations were down slightly by 3%
YoY. Despite these dips, with originations in Q2 2023 at 295K and
290K for HELOCs and home equity loans, respectively, volumes were
well above levels seen between 2008 and 2021. While still below Q3
2019 pre-pandemic levels, mortgage account-level delinquencies (60+
DPD) were up 15% YoY to 1.02%. This marks the sixth consecutive
quarter of increases, though delinquency levels remain controlled
by historical standards.
Instant Analysis
“Following a period of historically low account delinquencies,
delinquencies have seen six consecutive quarters of YoY increases –
inching them closer to pre-pandemic levels. Delinquencies increased
across all stages (early, mid and late) and all loan types. Vintage
performance, which reflects the performance of an account in
different periods after the loan was granted, shows deterioration
in more recent originations. New mortgage vintages are performing
worse than vintages of the past four years. In the midst of
increasing non-mortgage debt and rising delinquencies across the
board, the record levels of equity available to homeowners will
remain a viable solution to ease debt pressures.”
– Joe Mellman, senior vice president and mortgage
business leader at TransUnion
Q3 2023 Mortgage Trends
Mortgage Lending Metric |
Q3 2023 |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Number of Mortgage Loans |
52.4 million |
52.2 million |
51.2 million |
50.7 million |
Account-Level Delinquency Rate (60+ DPD) |
1.02% |
0.89% |
0.80% |
1.08% |
Prior Quarter Originations* |
1.2 million |
1.9 million |
3.5 million |
3.3 million |
Average Loan Amounts of New Mortgage
Loans* |
$343,751 |
$342,778 |
$303,991 |
$293,731 |
Average Balance per Consumer |
$256,858 |
$249,326 |
$233,439 |
$219,481 |
Total Balances of All Mortgage Loans |
$11.8 trillion |
$11.5 trillion |
$10.5 trillion |
$9.7 trillion |
Number of HELOC Originations* |
294,649 |
409,110 |
278,029 |
261,143 |
Number of Home Equity loan Originations* |
289,202 |
296,723 |
207,957 |
180,982 |
* Originations are viewed one quarter in arrears to account
for reporting lag.Click here for additional mortgage industry
metrics. Click here for a Q3 2023 mortgage industry
infographic.
New vs. used auto originations continue to revert toward
pre-pandemic norms while monthly payments stabilize
Q3 2023 CIIR Auto Loan Summary
Originations in Q2 2023 were down 9% YoY to 6.3 million while at
the same time experiencing a slight seasonal uptick of 4.6% over
the previous quarter. For the second consecutive quarter,
originations were down across most risk tiers YoY, with only super
prime showing a YoY gain of 5.8%. Subprime and near-prime
originations continue to be the most suppressed, down 15.2% YoY.
The new vs. used split continues to trend back towards pre-pandemic
norms, with new cars making up 43% of all cars financed in Q3 2023,
up from 39% of all cars one year prior. Average amounts financed
for new vehicles saw a YoY decline of 2.6% YoY, while used saw a
YoY decline of 4.8%. Monthly payments are up for used vehicles
(1.3%) and new vehicles (4.2%) YoY; however, QoQ monthly payments
held relatively flat among used car purchases and saw a modest
decline among new car purchases. Leasing market share currently
stands at 21% of new vehicle registrations, up from its 2022 low of
17% but still below its pre-pandemic level of ~30%. Point in time
60+ DPD account delinquency increased to 1.35% in Q3 2023, up from
1.19% in Q3 2022. Vintages continue to show performance similar to
2021 cohorts. Early 2022 cohorts looked materially worse, but an
early look at the performance of Q1 2023 originations shows slight
improvement over a year prior.
Instant Analysis
“The new vehicle market has improved; however, recent events,
including the United Auto Workers strike, could impact continued
growth due to consumer perception and inventory of certain vehicle
models. High interest rates continue to help drive up monthly
payments for both used and new vehicles. As interest rates and
cross-wallet inflation are likely to remain relatively high for at
least a while longer, affordability will continue to be
challenging, particularly among below-prime consumers. Lenders’
close eye on portfolio delinquency and macroeconomic indicators
will likely determine if/when underwriters expand their buy boxes
to riskier borrowers.”
– Satyan Merchant, senior vice president and
automotive business leader at TransUnion
Q3 2023 Auto Loan Trends
Auto Lending Metric |
Q3 2023 |
Q3 2022 |
Q3 2021 |
Q3 2020 |
Total Auto Loan Accounts |
80.4 million |
80.2 million |
82.0 million |
82.6 million |
Prior Quarter
Originations1,3 |
6.3 million |
6.9 million |
8.2 million |
6.4 million |
Average Monthly Payment NEW2 |
$737 |
$707 |
$630 |
$575 |
Average Monthly Payment
USED2 |
$537 |
$529 |
$476 |
$401 |
Average Balance per
Consumer3 |
$23,809 |
$22,642 |
$20,997 |
$19,699 |
Average Amount Financed on New Auto
Loans2 |
$40,792 |
$41,872 |
$38,686 |
$35,474 |
Average Amount Financed on Used Auto
Loans2 |
$27,036 |
$28,405 |
$26,265 |
$21,446 |
Consumer-Level Delinquency Rate (60+
DPD)3 |
1.53% |
1.29% |
0.86% |
0.99% |
1Note: Originations are viewed one quarter in arrears to account
for reporting lag.2Data from S&P Global
MobilityAutoCreditInsight, Q3 2023 data only for months of July
& August.3TU discovered irregularities from a data contributor,
and that data has been removed from our market reporting until
resolution.Click here for a Q3 2023 auto infographic.
For more information about the report, please register for
the Q3 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 |
Dave Blumberg |
|
TransUnion |
|
|
E-mail |
dblumberg@transunion.com |
|
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Telephone |
312-972-6646 |
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