Consumer Credit Appetite Remains High Despite Elevated Interest Rates
The Q1 2024 TransUnion Credit Industry Insights Report (CIIR) highlights resilience in the consumer credit market despite persistent high interest rates. Key findings include a growth of 20 million bankcards YoY, totaling 543 million. Average new bankcard account credit lines increased by 3.8% to $5,628. Unsecured personal loan balances grew 9% YoY to $245 billion, with a 5% increase in the number of consumers holding these loans. However, delinquencies have risen across several products, with a notable decrease in unsecured personal loan delinquencies. Mortgage originations were down 11% YoY, with high interest rates continuing to dampen the market. Auto loan originations remained stable with higher delinquencies. Despite challenges, the credit market remains resilient with hopes pinned on stable unemployment rates.
- Bankcards grew by 20 million YoY, totaling 543 million.
- Average new bankcard account credit lines rose by 3.8% to $5,628.
- Unsecured personal loan balances increased by 9% to $245 billion.
- Number of consumers with unsecured personal loans rose by 5% YoY.
- Bankcard balances increased by 11.3% YoY, surpassing $1 trillion.
- Super prime originations led growth in bankcard and unsecured personal loans.
- Average debt per borrower in bankcards increased 8.5% YoY to $6,218.
- FHA mortgage originations increased by 9% YoY in Q4 2023.
- Credit card delinquencies increased, with 90+ DPD up by 29bps YoY to 2.55%.
- Total new account credit lines decreased by 2.6% due to tightening origination environment.
- Delinquencies rose across credit cards, mortgages, and auto loans.
- Mortgage originations were down 11% YoY due to high interest rates.
- Auto loan delinquencies increased to 1.33% in Q1 2024.
- Subprime unsecured personal loan originations declined nearly 5% YoY.
- Overall mortgage delinquencies increased to 1.14% compared to 0.90% YoY.
- Auto loan originations remain below pre-pandemic levels, especially among below prime risk tiers.
Insights
Consumer credit activity remains strong despite higher interest rates, a point which stands out significantly in TransUnion's Q1 2024 report. From a financial perspective, this indicates a resilient consumer base that continues to rely on credit to manage expenses. The increase in the number of bankcards by
However, the decline in total new account credit lines by
The increase in unsecured personal loans by
In summary, while the high consumer credit appetite can be taken as a positive signal of economic resilience, the associated rise in delinquencies and the possibility of tighter credit conditions warrant caution.
Rating: 1 (positive)
The report highlights a concerning rise in delinquencies across several credit products, except for unsecured personal loans, which saw a decline in borrower-level delinquencies by
The increase in 90+ days past due (DPD) rates for credit cards to
Furthermore, the
Overall, the data points to a mixed outlook where the buoyant credit market is tempered by rising delinquency risks.
Rating: 0 (neutral)
The insights provided by the Q1 2024 TransUnion report reflect broader economic themes. Consumers' increased reliance on credit amidst persistent inflation and high interest rates underscores the pressure on household finances. The report indicates that inflation is a more immediate concern for consumers than high-interest rates, leading them to tap into available credit lines.
Another significant point is the super prime segment's growth in credit lines and origination volumes. This suggests that higher-income individuals are leveraging credit more, possibly to take advantage of investment opportunities or to maintain lifestyle standards amidst rising costs.
In contrast, the slowing growth rate in total balances and the increase in delinquencies across most credit products highlight the economic strain. This duality suggests that while some consumers can manage increased financial burdens, others are increasingly feeling the pinch.
For retail investors, these trends signal a cautious optimism where consumer credit remains robust but fraught with risks related to rising delinquency rates.
Rating: 1 (positive)
Q1 2024 TransUnion Credit Industry Insights Report explores the latest credit trends
CHICAGO, May 16, 2024 (GLOBE NEWSWIRE) -- Findings from the newly released Q1 2024 Quarterly Credit Industry Insights Report (CIIR) from TransUnion (NYSE: TRU) reveal that the consumer credit market continues to show resiliency in the face of a challenging economic environment, as consumers continue to turn to credit to help manage the higher costs they are facing.
Despite interest rates that remain persistently high relative to recent history, certain key credit card metrics have seen steady growth in recent years, including total number of bankcards, average new bankcard account credit lines, and the total number of U.S. consumers who carry a bankcard balance.
- As of Q1 2024, consumers hold more than 543 million bankcards in their wallets, a growth of 20 million year-over-year (YoY) and more than 88 million from just three years ago.
- And more consumers are using their available credit line, as the number of consumers who carry a bankcard balance has seen steady growth as well, up
2.2% YoY. - Average new account credit lines saw YoY growth, up
3.8% to$5,628 , in part due to a greater proportion of originations among super prime, for whom new account credit lines tend to be higher.
While average new account credit lines saw YoY growth, it is worth noting that total new account credit lines were down
Consumers have also increasingly turned to unsecured personal loans. Total unsecured personal loan balances have grown
“Consumers’ access to credit has grown significantly in recent years and will provide them with credit to tap into when needed,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Many of these consumers are choosing to take advantage of these products that can help them manage their rising monthly household expenses, despite the fact that these products may bring with them interest rates that are higher relative to recent history. For these consumers, the short-term pressure of inflation poses a more pressing problem to solve than the potential impact of higher interest rate credit, which includes higher monthly debt service payments.”
| Bankcards and Unsecured Personal Loans Continue to See Growth Despite Higher Interest Rates |
| | Q1 2024 | Q1 2023 | Q1 2022 | Q1 2021 | ||||
| Number of Credit Cards (Bankcards) | 543.1 million | 523.2 million | 490.0 million | 455.5 million | ||||
| Number of Consumers Carrying a Bankcard Balance | 169.0 million | 165.3 million | 158.9 million | 150.1 million | ||||
| Average New Bankcard Account Credit Lines* | $5,628 | |||||||
| Total Unsecured Personal Loan Balances | ||||||||
| Number of Consumers with Unsecured Personal Loans | 23.5 million | 22.4 million | 20.4 million | 19.0 million | ||||
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Delinquencies continue to rise across a number of credit products, with increases seen in credit cards, mortgages, and auto. However, a decrease was seen in unsecured personal loans, largely driven by a shift to lower-risk borrowers, with a year-over-year (YoY) decline in borrower-level delinquency 60 days or more past due (60+ DPD). While last quarter saw delinquencies increase, it is worth noting that we have seen a slowing in the rise in credit card delinquency along with a decline in unsecured personal loan delinquency.
“We have seen delinquencies tick up in recent quarters, which is certainly something lenders need to follow closely. At the same time, the consumer credit market remains resilient given the compounding of relatively high interest rates and persistent inflation,” said Raneri. “The prevailing hope is that as long as unemployment figures remain relatively low, serious delinquency rates may stabilize.”
To learn more about the latest consumer credit trends, register for the Q1 2024 Quarterly Credit Industry Insights Report webinar. Read on for more specific insights about credit cards, personal loans, auto loans and mortgages.
Super prime drives bankcard originations amidst declines overall
Q1 2024 CIIR Credit Card Summary
Bankcard originations were down
Instant Analysis
“As consumers manage expenses amidst stubbornly high inflation, demand for credit continues to be strong despite the currently relatively high interest rates. Evidence for this can be seen in the significant bankcard balance growth we are seeing across risk tiers. Delinquencies have increased, however, the growth trend has slowed. Nevertheless, they continue to be worth careful monitoring moving forward. ”
- Paul Siegfried, senior vice president and credit card business leader at TransUnion
| Q1 2024 Credit Card Trends |
Credit Card Lending Metric (Bankcard) | Q1 2024 | Q1 2023 | Q1 2022 | Q1 2021 |
| Number of Credit Cards (Bankcards) | 543.1 million | 23.2 million | 490.0 million | 455.5 million |
| Borrower-Level Delinquency Rate (90+ DPD) | 2.55% | |||
| Total Credit Card Balances | ||||
| Average Debt Per Borrower | $6,218 | |||
| Number of Consumers Carrying a Balance | 169.0 million | 165.3 million | 158.9 million | 150.1 million |
| Prior Quarter Originations* | 19.3 million | 20.6 million | 21.2 million | 15.0 million |
| Average New Account Credit Lines* | $5,628 |
*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 Q1 2024 credit card infographic.
Total unsecured personal loan balances tick up while subprime delinquencies decline
Q1 2024 CIIR Unsecured Personal Loan Summary
Total unsecured personal loan balances grew
Instant Analysis
“Total balance growth has slowed slightly after three years, with the YoY increase of
- Liz Pagel, senior vice president of consumer lending at TransUnion
| Q1 2024 Unsecured Personal Loan Trends |
Personal Loan Metric | Q1 2024 | Q1 2023 | Q1 2022 | Q1 2021 |
| Total Balances | ||||
| Number of Unsecured Personal Loans | 28.1 million | 26.9 million | 23.4 million | 20.9 million |
| Number of Consumers with Unsecured Personal Loans | 23.5 million | 22.4 million | 20.4 million | 19.0 million |
| Borrower-Level Delinquency Rate (60+ DPD) | 3.75% | |||
| Average Debt Per Borrower | $11,829 | |||
| Average Account Balance | $8,737 | |||
| Prior Quarter Originations* | 5.0 million | 5.2 million | 5.7 million | 4.2 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 2024 unsecured personal loan infographic.
Purchase share of mortgage originations hits a record as interest rates remain high
Q1 2024 CIIR Mortgage Loan Summary
Q4 2023 origination volumes were down
Instant Analysis
“Stubbornly high interest rates continue to suppress the mortgage market, keeping many would-be home-buyers on the sidelines until rates begin dropping. There remains hope that rates will decline over the course of 2024; however, that may happen later than previously anticipated in light of the most recent inflation report. While originations remain down YoY, the rates of decline continue to decelerate, which may be a sign that some consumers are simply tired of waiting. Rising delinquencies are worth paying attention to, though they continue to remain below pre-pandemic levels.”
- Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion
| Q1 2024 Mortgage Trends |
Mortgage Lending Metric | Q1 2024 | Q1 2023 | Q1 2022 | Q1 2021 |
| Number of Mortgage Loans | 53.2 million | 52.9 million | 51.5 million | 50.8 million |
| Consumer-Level Delinquency Rate (60+ DPD) | 1.14% | |||
| Prior Quarter Originations* | 931,661 | 1.0 million | 2.9 million | 4.0 million |
| Average Loan Amounts of New Mortgage Loans* | $327,102 | |||
| Average Balance per Consumer | $260,745 | |||
| Total Balances of All Mortgage Loans |
* Originations are viewed one quarter in arrears to account for reporting lag.
Click here for additional mortgage industry metrics. Click here for a Q1 2024 mortgage industry infographic.
Average Auto Monthly Payments Stabilize as Challenges Around Affordability Remain
Q1 2024 CIIR Auto Loan Summary
Q4 2023 saw 5.8 million originations, which is in line with the total one year ago. Originations remain down as compared to 2019 across all risk tiers, with the largest declines seen among below prime risk tiers. The new/used split continues to trend back towards its pre-pandemic norm. As we see inventories continue to build back following the pandemic, leasing for Q1 2024 represented
Instant Analysis
“Affordability continues to pose a challenge for the used vehicle market and, in particular, for below prime consumers, who have seen a buying climate of higher interest rates, increasing lender pullback, and cross-wallet inflation. While some brands continue to see lingering shortages, new vehicle inventories continue to recover from their pandemic-era lows. This has given the leasing market a boost, although leasing still remains well below its pre-pandemic numbers. Higher delinquencies are likely to further constrain loan availability, potentially keeping the market tempered until interest rates begin to see declines.”
- Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion
| Q1 2024 Auto Loan Trends |
Auto Lending Metric | Q1 2024 | Q1 2023 | Q1 2022 | Q1 2021 |
| Total Auto Loan Accounts | 80.1 million | 80.1 million | 80.5 million | 82.2 million |
| Prior Quarter Originations1 | 5.8 million | 5.8 million | 6.5 million | 6.6 million |
| Average Monthly Payment NEW2 | $744 | |||
| Average Monthly Payment USED2 | $525 | |||
| Average Balance per Consumer | $24,035 | |||
| Average Amount Financed on New Auto Loans2 | $41,165 | |||
| Average Amount Financed on Used Auto Loans2 | $25,977 | |||
| Consumer-Level Delinquency Rate (60+ DPD) | 1.5% |
1Note: Originations are viewed one quarter in arrears to account for reporting lag.
2Data from S&P Global MobilityAutoCreditInsight, Q1 2024 data only for months of January & February.
Click here for additional auto industry metrics. Click here for a Q1 2024 auto infographic.
For more information about the report, please register for the Q1 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
| Contact | Dave Blumberg TransUnion |
| dblumberg@transunion.com | |
| Telephone | 312-972-6646 |
FAQ
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