Gen Z Coming of Age in Credit Markets
- Gen Z consumers' use of credit cards and personal loans is increasing relative to the overall population, indicating a trend towards financial independence and coping with rising expenses. Bankcard balances reached a new record high of $963 billion in Q2 2023, up 17.4% YoY. Gen Z consumers' total balances increased 51.9% YoY, now standing at $55 billion, representing 5.7% of all balances.
- Unsecured personal loan originations fell overall YoY for the second consecutive quarter, down 16.1%. Subprime originations for auto and unsecured personal loans were also down YoY, indicating a trend towards focusing on less risky credit tiers.
Q2 2023 TransUnion Credit Industry Insights Report explores latest credit trends
CHICAGO, Aug. 10, 2023 (GLOBE NEWSWIRE) -- At the mid-point of 2023, Gen Z consumers (born between 1995 and 2005) increasingly find themselves with new access to credit products. The newly released Q2 2023 Quarterly Credit Industry Insights Report (CIIR) from TransUnion (NYSE: TRU) shows that relative to the consumer population as a whole, Gen Z consumers continue to turn to bankcards and unsecured personal loans even as lenders have begun to tighten underwriting.
TransUnion’s most recent Consumer Pulse findings from July 2023 found that
“It makes sense to see Gen Z consumers’ use of credit cards and personal loans increase relative to consumers as a whole as they age into financial independence,” said Michele Raneri, vice president of U.S. research and consulting at TransUnion. “Like the overall population, many Gen Z borrowers are facing the same financial challenges brought on by high interest rates and inflation. As a result, they are tapping into these available credit products to help them cope with rising expenses and the tightening of their monthly budgets.”
Bankcard balances once again reached a new record high of
Gen Z Total Credit Card Balances and Share of Total Balances Are Up YoY
Key Metrics | Q2 2023 | Q2 2022 | YoY% Change |
Total Credit Card Balances (Bankcard) | |||
Gen Z Total Credit Card Balances (Bankcard) | |||
Gen Z Share of Credit Card Balances (Bankcard) | 5.7% |
The report also found that lenders are continuing to increasingly focus on less risky credit tiers when considering new originations across a number of credit products, particularly impacting subprime borrowers. For instance, auto originations in Q1 2023 were down
To learn more about the latest consumer credit trends, register for the Q2 2023 Quarterly Credit Industry Insights Report webinar. Read on for more specific insights about credit cards, personal loans, auto loans and mortgages.
Bankcard originations and average credit lines hit record highs
Q2 2023 CIIR Credit Card Summary
Bankcard originations hit a new record high in Q1 2023, up
Instant Analysis
“Bankcard balances continue to grow; however, consumers are distributing those balances across more cards than they have in the past, which has resulted in balances per account remaining within normal limits. Lenders have seemingly made a clear shift in acquisition strategy as, following two consecutive quarters of record originations, subprime’s share has declined significantly for the second quarter in a row, while super prime’s share has increased to that of pre-pandemic levels.”
- Paul Siegfried, senior vice president and credit card business leader at TransUnion
Q2 2023 Credit Card Trends
Credit Card Lending Metric (Bankcard) | Q2 2023 | Q2 2022 | Q2 2021 | Q2 2020 |
Number of Credit Cards | 530.6 million | 500.0 million | 464.9 million | 453.6 million |
Borrower-Level Delinquency Rate (90+ DPD) | 2.06% | |||
Total Credit Card Balances | ||||
Average Debt Per Borrower | $ 5,947 | |||
Number of Consumers with a Credit Card Account | 167.2 million | 161.6 million | 153.3 million | 147.7 million |
Prior Quarter Originations* | 19.0 million | 18.9 million | 15.0 million | 15.5 million |
Average New Account Credit Lines* | $5,972 |
*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 reach new record of
Q2 2023 CIIR Personal Loan Summary
Total unsecured loan balances grew to
Instant Analysis
“Unsecured personal loan balances continue to increase, driven by strong growth in the super prime segment. Growth continued to slow, however, as lenders steered towards less risky borrowers. Q1 originations were down
- Liz Pagel, senior vice president of consumer lending at TransUnion
Q2 2023 Unsecured Personal Loan Trends
Personal Loan Metric | Q2 2023 | Q2 2022 | Q2 2021 | Q2 2020 |
Total Balances | ||||
Number of Unsecured Personal Loans | 27.2 million | 24.9 million | 20.7 million | 22.2 million |
Number of Consumers with Unsecured Personal Loans | 22.7 million | 21.0 million | 18.7 million | 20.0 million |
Borrower-Level Delinquency Rate (60+ DPD) | 3.62% | |||
Average Debt Per Borrower | $11,548 | |||
Prior Quarter Originations* | 4.3 million | 5.0 million | 3.2 million | 3.9 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 2023 unsecured personal loan infographic.
Mortgage balances remain near record highs while more consumers turn to HELOANs
Q2 2023 CIIR Mortgage Loan Summary
Total mortgage balances fell to
Instant Analysis
“Mortgage rates higher than those in recent history continue to lend pause to potential borrowers, resulting in historically low mortgage originations. Demand for refinance continues to be the hardest hit by these elevated rates. Given that the large majority of existing mortgages have rates below
- Joe Mellman, senior vice president and mortgage business leader at TransUnion
Q2 2023 Mortgage Trends
Mortgage Lending Metric | Q2 2023 | Q2 2022 | Q2 2021 | Q2 2020 |
Number of Mortgage Loans | 52.5 million | 51.8 million | 51.2 million | 50.7 million |
Borrower-Level Delinquency Rate (60+ DPD) | 0.89% | |||
Prior Quarter Originations* | 0.9 million | 2.2 million | 3.9 million | 2.2 million |
Average Balance of New Mortgage Loans* | $326,214 | |||
Average Balance per Consumer | $253,838 | |||
Total Balances of All Mortgage Loans | ||||
Number of HELOC Originations* | 251,671 | 291,736 | 207,422 | 243,370 |
Number of Home Equity loan Originations* | 239,764 | 203,093 | 157,159 | 148,727 |
* Originations are viewed one quarter in arrears to account for reporting lag.
With inventories on the rebound, average amounts financed for new and used cars stabilize
Q2 2023 CIIR Auto Loan Summary
Originations in Q1 2023 were down
Instant Analysis
“Inventories are on the rebound from pandemic-era lows, which will likely put pressure on both new and used car prices and lead to the return of more new vehicle incentives. This is important as affordability continues to remain a central issue for consumers, particularly in below-prime risk tiers. As used vehicle values continue to drop from peaks, the focus remains on those recent originations from the past couple of years that originated at peak prices and higher loan-to-value ratios. Originations prior to 2021 are likely in positive equity positions as vehicle values are still elevated, and those loans have had sufficient time to see pay down in their principal balances.”
- Satyan Merchant, senior vice president and automotive business leader at TransUnion
Q2 2023 Auto Loan Trends
Auto Lending Metric | Q2 2023 | Q2 2022 | Q2 2021 | Q2 2020 |
Total Auto Loan Accounts | 81,202,918 | 81,361,832 | 83,153,346 | 83,524,638 |
Account-Level Delinquency Rate (60+ DPD) | 1.71% | |||
Prior Quarter Originations* | 6,120,340 | 6,753,511 | 7,366,527 | 6,336,612 |
Average Monthly Payment NEW** | $739 | |||
Average Monthly Payment USED** | $532 | |||
Average Balance per Consumer | $23,401 | |||
Average Amount Financed on New Auto Loans** | $41,240 | |||
Average Amount Financed on Used Auto Loans** | $26,485 |
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
**Data from S&P Global MobilityAutoCreditInsight, Q2 2023 data only for months of April & May
Click here for additional auto industry metrics. Click here for a Q2 2023 auto infographic.
For more information about the report, please register for the Q2 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.
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Contact | Dave Blumberg TransUnion |
dblumberg@transunion.com | |
Telephone | 312-972-6646 |
FAQ
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