Anticipating Future Fed Interest Rate Cuts, Consumers Continue to Use Existing Credit, Gain Access to New Lines
TransUnion's Q2 2024 Credit Industry Insights Report reveals that consumers continue to engage with credit products amid anticipation of future Fed interest rate cuts. Key findings include:
1. Unsecured personal loan balances grew 6% YoY, with originations up for the first time in five quarters.
2. Credit card balances increased 4.8% YoY, led by subprime growth of 12.3%.
3. Auto loan originations decreased 0.4% YoY, except for super prime, which grew 10.3%.
4. Mortgage originations saw YoY growth for the first time since 2021, up 2% in Q1 2024.
The report highlights a divergence in credit usage across risk tiers, with prime and below consumers showing higher card balances and utilization, while super prime consumers are seeing more originations in areas like credit cards and auto loans.
Il rapporto sulle informazioni del settore creditizio di TransUnion per il secondo trimestre del 2024 rivela che i consumatori continuano a interagire con i prodotti creditizi in attesa di futuri tagli dei tassi di interesse da parte della Fed. I risultati principali includono:
1. I saldi dei prestiti personali non garantiti sono aumentati del 6% rispetto all'anno precedente, con le nuove concessioni che sono aumentate per la prima volta in cinque trimestri.
2. I saldi delle carte di credito sono aumentati del 4,8% su base annua, con una crescita del segmento subprime del 12,3%.
3. Le nuove concessioni di prestiti auto sono diminuite dello 0,4% su base annua, ad eccezione del segmento super prime, che ha registrato un incremento del 10,3%.
4. Le nuove concessioni ipotecarie hanno visto una crescita su base annua per la prima volta dal 2021, aumentando del 2% nel primo trimestre del 2024.
Il rapporto evidenzia una divergenza nell'uso del credito tra i vari livelli di rischio, con i consumatori prime e subprime che mostrano saldi e utilizzi più elevati delle carte, mentre i consumatori super prime registrano più nuove concessioni in settori come carte di credito e prestiti auto.
El Informe sobre Perspectivas de la Industria Crediticia del Segundo Trimestre de 2024 de TransUnion revela que los consumidores continúan utilizando productos crediticios en anticipación de futuros recortes en las tasas de interés de la Fed. Los hallazgos clave incluyen:
1. Los saldos de préstamos personales no garantizados crecieron un 6% interanual, con un aumento en las originaciones por primera vez en cinco trimestres.
2. Los saldos de tarjetas de crédito aumentaron un 4.8% interanual, liderados por un crecimiento del subprime del 12.3%.
3. Las originaciones de préstamos para automóviles disminuyeron un 0.4% interanual, excepto en el segmento super prime, que creció un 10.3%.
4. Las originaciones hipotecarias vieron un crecimiento interanual por primera vez desde 2021, aumentando un 2% en el primer trimestre de 2024.
El informe destaca una divergencia en el uso del crédito entre los distintos niveles de riesgo, con consumidores prime y subprime mostrando saldos y utilización más altos, mientras que los consumidores super prime están viendo más originaciones en áreas como tarjetas de crédito y préstamos para automóviles.
TransUnion의 2024년 2분기 신용 산업 통찰력 보고서는 소비자들이 향후 연준의 금리 인하를 기대하며 신용 상품에 계속 참여하고 있음을 보여줍니다. 주요 발견 사항은 다음과 같습니다:
1. 보증이 없는 개인 대출 잔고가 전년 대비 6% 증가하였고, 출처는 5개 분기 만에 처음으로 증가했습니다.
2. 신용 카드 잔고가 전년 대비 4.8% 증가했으며, 이는 서브프라임이 12.3% 성장하면서 주도했습니다.
3. 자동차 대출 출처는 전년 대비 0.4% 감소했지만, 슈퍼프라임은 10.3% 증가했습니다.
4. 주택 담보 대출 출처는 2021년 이후 처음으로 전년 대비 증가하며, 2024년 1분기에 2% 상승했습니다.
보고서는 위험 수준 간의 신용 사용 차이를 강조하며, 프라임 및 서브프라임 소비자는 더 높은 카드 잔고와 활용도를 보이는 반면, 슈퍼프라임 소비자는 신용 카드 및 자동차 대출과 같은 영역에서 더 많은 출처를 보고 있습니다.
Le rapport sur les perspectives de l'industrie du crédit de TransUnion pour le deuxième trimestre de 2024 révèle que les consommateurs continuent à s'engager avec des produits de crédit en anticipation de futures baisses des taux d'intérêt de la Fed. Les principales conclusions incluent:
1. Les soldes des prêts personnels non garantis ont crû de 6 % par rapport à l'année précédente, avec des origination en hausse pour la première fois en cinq trimestres.
2. Les soldes des cartes de crédit ont augmenté de 4,8 % par rapport à l'année précédente, avec une croissance subprime de 12,3 %.
3. Les origination de prêts automobiles ont diminué de 0,4 % par rapport à l'année précédente, sauf pour le segment super prime, qui a crû de 10,3 %.
4. Les origination hypothécaires ont enregistré une croissance par rapport à l'année précédente pour la première fois depuis 2021, avec une augmentation de 2 % au premier trimestre 2024.
Le rapport souligne une divergence dans l'utilisation du crédit à travers les niveaux de risque, les consommateurs prime et subprime affichant des soldes et une utilisation plus élevés, tandis que les consommateurs super prime voient plus d'origination dans des domaines comme les cartes de crédit et les prêts automobiles.
Der Bericht über die Kreditbrancheneinblicke von TransUnion für das 2. Quartal 2024 zeigt, dass Verbraucher weiterhin mit Kreditprodukten in Erwartung zukünftiger Zinssenkungen der Fed interagieren. Wesentliche Ergebnisse umfassen:
1. Die Salden unbesicherter persönlicher Darlehen wuchsen im Jahresvergleich um 6 %, wobei die Neuungen zum ersten Mal in fünf Quartalen zunahmen.
2. Die Salden von Kreditkarten stiegen um 4,8 % im Jahresvergleich, angeführt von einem Wachstum im Subprime-Bereich von 12,3 %.
3. Die Neuvergaben von Autokrediten verringerten sich um 0,4 % im Jahresvergleich, mit Ausnahme von Super Prime, das um 10,3 % wuchs.
4. Die Neuvergaben von Hypotheken verzeichneten zum ersten Mal seit 2021 ein Wachstum im Jahresvergleich und stiegen um 2 % im 1. Quartal 2024.
Der Bericht hebt eine Divergenz in der Kreditnutzung über Risikostufen hinweg hervor, wobei Prime- und Subprime-Verbraucher höhere Kartensalden und -nutzungen aufweisen, während Super Prime-Verbraucher in Bereichen wie Kreditkarten und Autokrediten mehr Neuvergaben verzeichnen.
- Unsecured personal loan originations grew 7% YoY in Q1 2024, led by super prime and near prime segments
- Credit card total balances reached $1.05 trillion, marking the third consecutive quarter above one trillion
- Mortgage originations increased 2% YoY in Q1 2024, the first YoY growth since 2021
- Auto loan originations for super prime consumers increased 10.3% YoY in Q1 2024
- Gen Z increased its share of mortgage originations from 12.4% to 14.9% YoY
- Credit card borrower-level delinquencies (90+ DPD) increased by 20bps YoY to 2.26%
- Bank card originations declined 7% YoY, marking the fourth consecutive quarter of YoY declines
- Mortgage delinquencies (60+ DPD) increased to 1.12% in Q2 2024, up from 0.89% in Q2 2023
- Auto loan delinquencies (60+ DPD) increased slightly YoY to 1.4%
- Total new account balance for unsecured personal loans fell 10% YoY to $27 billion in Q1 2024
The Q2 2024 TransUnion CIIR reveals mixed signals for the credit market. While overall credit engagement remains strong, there's a clear divergence between consumer segments. Super prime borrowers are seeing increased access and originations across various credit products, while prime and below segments face more challenges.
Key observations:
- Credit card balances grew
4.8% YoY, with subprime leading at12.3% - Unsecured personal loan balances increased
6% YoY, marking the 7th consecutive quarter of growth - Mortgage originations saw YoY growth for the first time since 2021
- Auto loan originations decreased slightly, except for the super prime segment
These trends suggest that while consumers are still relying on credit, lenders are becoming more selective, favoring lower-risk borrowers. The anticipated Fed rate cuts could significantly impact these trends in the coming quarters.
The credit market landscape is evolving in response to economic pressures. Notable trends include:
- Generational shift: Gen Z's share of credit card originations increased
2% YoY, now accounting for19% of new accounts - Mortgage market dynamics: Gen Z's share of mortgage originations jumped from
12.4% to14.9% YoY - Auto finance trends: The new/used vehicle origination distribution is approaching pre-pandemic levels, with
40% new and60% used in Q1 2024
These shifts indicate changing consumer behaviors and preferences across generations. The increased participation of Gen Z in credit markets suggests a growing financial engagement among younger consumers. However, the overall tightening of credit access for non-super prime borrowers could lead to increased financial stress for some segments, potentially impacting consumer spending and economic growth in the near term.
The Q2 2024 CIIR highlights evolving risk patterns in the credit market:
- Credit card delinquencies (90+ DPD) increased 20bps YoY to
2.26% - Unsecured personal loan delinquencies (60+ DPD) decreased to
3.4% , with subprime seeing a7% YoY decline - Mortgage delinquencies (60+ DPD) rose to
1.12% from0.89% YoY - Auto loan delinquencies (60+ DPD) slightly increased YoY to
1.4%
The divergent delinquency trends across product types suggest varying levels of financial stress among different consumer segments. The improvement in personal loan delinquencies, particularly in the subprime category, is a positive sign. However, the continued rise in mortgage and auto loan delinquencies warrants close monitoring. Lenders should remain vigilant and may need to adjust their risk management strategies, especially if economic conditions deteriorate further.
Q2 2024 TransUnion Credit Industry Insights Report explores the latest credit trends
CHICAGO, Aug. 08, 2024 (GLOBE NEWSWIRE) -- Findings from the newly released Q2 2024 Quarterly Credit Industry Insights Report (CIIR) from TransUnion (NYSE: TRU) reveal that as consumers continue to await interest rate relief in the form of rate cuts, credit products continue to serve to bridge the financial gaps that may exist in many household budgets.
The report reveals that in this challenging current macroeconomic environment, consumers are continuing to engage in the credit market, taking on more balances and credit products. And while prime and below consumers are seeing lower year-over-year (YoY) new originations across many products, though not all, they continue to use their available credit to get by each month as evidenced by YoY growth in credit card balances and utilization.
“Consumers across the board continue to engage with a wide range of credit products, with continued balance growth across credit risk tiers. Lower risk super prime, in particular, originated more this quarter in areas such as credit cards and auto,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Of course, on the origination front, this doesn’t mean prime and below consumers don’t also have access to new credit in these areas. However, they are going to have to wait for lower interest rates and for their monthly payments to come down.”
Key findings include:
- Unsecured personal loan balance growth continued in Q2 2024, albeit at a more moderated pace. While it was the seventh consecutive quarter of balance growth, YoY growth was only
6% , down from the double-digit growth seen at its peak. Originations saw YoY growth for the first time in five quarters in Q1 2024 (the most recent quarter for which originations data are available). Growth was led by super prime and near prime, at12% and10% YoY growth respectively, and all risk tiers except prime plus seeing growth. - Bank card balances grew
4.8% YoY led by subprime at12.3% growth. All risk tiers saw growth YoY. Card originations were down7% YoY in Q1 2024. However, super prime saw growth YoY. - It’s a similar story with auto, with originations down YoY in Q1 2024, with the exception of super prime. Among the super prime risk tier, originations were up
10.3% YoY in Q1 2024. Balances grew2.7% YoY, primarily behind growth among the subprime (9.8% ) and super prime (7.9% ) risk tiers. - Mortgage originations saw YoY growth in Q1 2024, which represents the first YoY growth since 2021. The growth was headlined by growth on both ends of the credit risk spectrum, with subprime up
15.7% YoY and super prime up12.1% over that time.
Raneri added, “It remains to be seen how these numbers will change if and when the Fed lowers interest rates later this year. For consumers, the best thing that they can do is ensure that their credit is in the best position possible when that time comes in hopes of being able to take advantage of those lower rates.”
To learn more about the latest consumer credit trends, register for the Q2 2024 Quarterly Credit Industry Insights Report webinar. Read on for more specific insights about credit cards, personal loans, auto loans and mortgages.
Balances and accounts rise YoY as consumers continue to turn to cards
Q2 2024 CIIR Credit Card Summary
The total number of credit cards topped 545 million in Q2 2024 as consumers continued to turn to cards to help manage in this challenging economic environment. Similarly, balances continued to grow (up
Instant Analysis
“A more pronounced divergence appears to be occurring when it comes to how different consumer segments are faring in this economic environment, and in particular, how they are using their credit cards. Higher-risk prime and below segments seem to be experiencing more significant inflationary pressures and as such, relying on their cards more, evident in increasing balances and higher utilization. Originations will likely continue to decline for mid-tier and worse consumers as issuers look to less risky borrowers. We expect delinquency rates to continue to rise, though the growth rate should decelerate.”
- Paul Siegfried, senior vice president and credit card business leader at TransUnion
Q2 2024 Credit Card Trends
| Credit Card Lending Metric (Bankcard) | Q2 2024 | Q2 2023 | Q2 2022 | Q2 2021 |
| Number of Credit Cards (Bankcards) | 545.1 million | 530.6 million | 500.0 million | 463.4 million |
| Borrower-Level Delinquency Rate (90+ DPD) | 2.26% | |||
| Total Credit Card Balances | ||||
| Average Debt Per Borrower | $6,329 | |||
| Number of Consumers Carrying a Balance | 170.1 million | 167.2 million | 161.6 million | 152.9 million |
| Prior Quarter Originations* | 17.7 million | 19.0 million | 18.9 million | 14.8 million |
| Average New Account Credit Lines* |
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Click here for a Q2 2024 credit card infographic.
For more credit card industry information, click here for episodes of Extra Credit: A Card and Banking Podcast by TransUnion.
Rise in originations helps unsecured personal loans to new record balance
Q2 2024 CIIR Unsecured Personal Loan Summary
After five consecutive quarters of YoY originations declines, unsecured personal loan originations were up
Instant Analysis
“Super prime lending largely fueled the new record in balances and contributed to the first YoY quarter of origination growth in five quarters, although total new account balances were lower in aggregate. Delinquency numbers continued to improve for the second consecutive quarter, driven by lower subprime borrower delinquencies. We are seeing FinTech activity in the unsecured personal loans market returning to levels seen in previous years. It will be worth watching to see if FinTechs, and other lenders, are positioning themselves to take advantage of likely Federal Reserve rate cuts later in 2024.”
- Liz Pagel, senior vice president of consumer lending at TransUnion
Q2 2024 Unsecured Personal Loan Trends
| Personal Loan Metric | Q2 2024 | Q2 2023 | Q2 2022 | Q2 2021 |
| Total Balances | ||||
| Number of Unsecured Personal Loans | 28.8 million | 27.2 million | 24.9 million | 20.7 million |
| Number of Consumers with Unsecured Personal Loans | 23.9 million | 22.7 million | 21.0 million | 18.7 million |
| Borrower-Level Delinquency Rate (60+ DPD) | 3.38% | |||
| Average Debt Per Borrower | $11,687 | |||
| Average Account Balance | $8,557 | |||
| Prior Quarter Originations* | 4.6 million | 4.3 million | 5.0 million | 3.2 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 Q2 2024 unsecured personal loan infographic.
Mortgage originations up YoY for the first time since 2021
Q2 2024 CIIR Mortgage Loan Summary
Q1 2024 origination volumes increased by
Instant Analysis
“After reaching two decade highs in 2023, mortgage rates have moderated slightly over the first half of 2024, a likely factor in the modest originations gains referenced above. With a contracting monetary policy anticipated in the second half of 2024 due to easing inflationary pressure, mortgage rates are expected to decline further by the end of the year, which could further stimulate the mortgage market. Delinquencies continued to trend up in Q2, marking the ninth consecutive quarter of annual increases – and is a trend to continue to monitor in the coming quarters.”
- Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion
Q2 2024 Mortgage Trends
| Mortgage Lending Metric | Q2 2024 | Q2 2023 | Q2 2022 | Q2 2021 |
| Number of Mortgage Loans | 53.4 million | 52.5 million | 51.8 million | 51.1 million |
| Consumer-Level Delinquency Rate (60+ DPD) | 1.12% | |||
| Prior Quarter Originations* | 915K | 899K | 2.2 million | 3.9 million |
| Average Loan Amounts of New Mortgage Loans* | $339,232 | |||
| Average Balance per Consumer | $261,389 | |||
| Total Balances of All Mortgage Loans |
* 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 Q2 2024 mortgage industry infographic.
Average monthly auto payments down slightly YoY while delinquencies tick up
Q2 2024 CIIR Auto Loan Summary
Originations for Q1 2024 were at 6 million, which was down
Instant Analysis
“While originations remained down YoY, the fact that they were up significantly among super prime is a sign that increased inventories and price declines have gotten lower-risk borrowers off the sidelines and into the market. Subprime continued to see the most significant challenges, likely due to affordability concerns, with originations down
- Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion
Q2 2024 Auto Loan Trends
| Auto Lending Metric | Q2 2024 | Q2 2023 | Q2 2022 | Q2 2021 |
| Total Auto Loan Accounts | 80.2 million | 80.2 million | 80.4 million | 82.1 million |
| Prior Quarter Originations1 | 6.0 million | 6.0 million | 6.7 million | 7.3 million |
| Average Monthly Payment NEW2 | $740 | |||
| Average Monthly Payment USED2 | $527 | |||
| Average Balance per Consumer | $24,199 | |||
| Average Amount Financed on New Auto Loans2 | $41,324 | |||
| Average Amount Financed on Used Auto Loans2 | $25,995 | |||
| Consumer-Level Delinquency Rate (60+ DPD) | 1.4% |
1Note: Originations are viewed one quarter in arrears to account for reporting lag.
2Data from S&P Global MobilityAutoCreditInsight, Q2 2024 data only for months of April & May.
Click here for a Q2 2024 auto industry infographic.
For more information about the report, please register for the Q2 2024 Credit Industry Insight Report webinar.
About TransUnion (NYSE: TRU)
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FAQ
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