03/09/2022
Blog
The concerns which tightened lending practices during the pandemic seem to be wearing off.
According to the newly released Q4 2021 Quarterly Credit Industry Insights Report (CIIR), at the end of 2021, lenders continued to ramp up new account origination growth in the non-prime segment of the market.
That’s because consumer credit performance remained healthy across auto, credit card, personal loans and mortgages. Accounts originated during the pandemic in 2020 continued to perform as well or better when compared to loans from previous years.
In fact, TransUnion looked at the 12-month performance of loans originated in 2020 compared to earlier years to better gauge consumer credit health — and the news is promising: All credit products either outperformed or had similar performance compared to accounts opened in 2018 and 2019.
Further, despite recent upticks in delinquencies, serious delinquency rates also remained near or below pre-pandemic levels in the wake of expired forbearance programs, which has continued to restore lender confidence.
“Toward the end of 2021, the majority of accommodation programs expired, and lenders have seen consumers continue to perform well on their credit obligations. Lenders are eager to pursue growth, including expanding back into the non-prime consumer segment,” said Charlie Wise, Senior Vice President of Research and Consulting at TransUnion.
For more information about the report, please register for the Q4 2021 Quarterly Credit Industry Insights Report Webinar. Read on for more specific insights about credit cards, personal loans, auto loans, mortgages and the Credit Industry Indicator.
Consumer credit trends in the credit card sector: Q4 2021
Card issuers are expanding access to credit and using it as a growth strategy to offset consumers carrying lower balances.
Our view: While card balances are showing a slight improvement compared to a year ago, average balances are still below those observed before the pandemic. Balance growth has mostly come from the super prime cohort, and card issuers will continue to offer higher credit lines to those consumers. Card issuers are also tapping into new consumer risk segments to ramp up growth.
Q4 2021 credit card trends
Credit Card Lending Metric | Q4 2021 | Q4 2020 | Q4 2019 | Q4 2018 |
---|---|---|---|---|
Number of Credit Cards | 485.9 million | 454.9 million | 456.8 million | 432.1 million |
Borrower-Level Delinquency Rate (90+DPD) | 1.48% | 1.30% | 2.19% | 1.94% |
Average Debt Per Borrower | $5,127 | $5,103 | $5,818 | $5,726 |
Prior Quarter Originations* | 20.1 million | 12.3 million | 18.7 million | 16.4 million |
Average New Account Credit Lines* | $4,468 | $3,820 | $5,221 | $5,260 |
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Consumer credit trends in the personal loan sector: Q4 2021
The personal loan market has markedly rebounded and returned to pre-pandemic levels, with balances even exceeding Q4 2019 numbers.
Our view: Strong origination volumes (especially in below prime segments) coupled with material balance growth is an indication of lender confidence in consumer financial health.
Q4 2021 unsecured personal loan trends
Personal Loan Metric | Q4 2021 | Q4 2020 | Q4 2019 | Q4 2018 |
---|---|---|---|---|
Total Balances | $167 billion | $145 billion | $157 billion | $136 billion |
Number of Unsecured Personal Loans | 22.8 million | 21.2 million | 23.3 million | 21.1 million |
Number of Consumers with Unsecured Personal Loans | 19.9 million | 19.3 million | 20.8 million | 19.1 million |
Account-Level Delinquency Rate (90+ DPD) | 1.78% | 1.71% | 2.31% | 2.54% |
Borrower-Level Delinquency Rate (60+ DPD) | 3.00% | 2.70% | 3.48% | 3.66% |
Average Debt Per Borrower | $9,622 | $8,795 | $8,780 | $8,240 |
Prior Quarter Originations* | 5.1 million | 3.5 million | 5.0 million | 4.6 million |
Average Balance of New Unsecured Personal Loans* | $7,104 | $5,739 | $6,211 | $6,153 |
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Consumer credit trends in the auto sector: Q4 2021
Consumer performance remains healthy, especially notable given the majority of pandemic forbearance programs have expired. However, reduced vehicle inventory and semi-conductor chip shortages continue to drive down vehicle affordability as prices increase, which is impacting originations.
Our view: Dealerships continue to face challenges around vehicle supply, and while originations stayed relatively flat in Q3 2021, uncertainty surrounding when those issues might be resolved continue to hang over the auto industry. That, coupled with rising vehicle prices, will impact auto sales through the remainder of 2022.
Q4 2021 auto loan trends
Auto Lending Metric | Q4 2021 | Q4 2020 | Q4 2019 | Q4 2018 |
---|---|---|---|---|
Number of Auto Loans | 82.4 million | 83.5 million | 83.8 million | 82.0 million |
Borrower-Level Delinquency Rate (60+DPD) | 1.59% | 1.57% | 1.50% | 1.45% |
Prior Quarter Originations* | 7.3 million | 7.3 million | 7.5 million | 7.1 million |
Average Monthly Payment* | $531 | $473 | $459 | $443 |
Average Balance of New Auto Loans* | $26,976 | $23,671 | $22,223 | $21,510 |
Average Debt Per Borrower | $21,210 | $19,791 | $19,183 | $18,833 |
*Note: Originations are viewed one quarter in arrears to account for reporting lag.
**Data from IHSM Catalyst
Consumer credit trends in the mortgage sector: Q4 2021
While still far above pre-pandemic origination levels, we’re seeing a slowdown in the piping hot mortgage sector, largely because rising interest rates have made it less attractive to secure a rate and term refinance.
Our view: With the pool of consumers who would benefit from a refinance shrinking and interest rates starting to rise, mortgage lenders need to implement diversified growth strategies. With demand still high, new consumer populations, such as the low-to-moderate income consumer segment, could be lucrative in the coming year.
Q4 2021 mortgage trends
Mortgage Lending Metric | Q4 2021 | Q4 2020 | Q4 2019 | Q4 2018 |
---|---|---|---|---|
Number of Mortgage Loans | 51.2 million | 50.7 million | 50.3 million | 49.5 million |
Account-Level Delinquency Rate (90+DPD) | 0.59% | 0.76% | 1.05% | 1.13% |
Prior Quarter Originations | 3.4 million | 3.9 million | 2.3 million | 16 million |
Mortgage Origination* Distribution Purchase | 55% | 48% | 62% | 78% |
Mortgage Origination Distribution Refinance | 45% | 52% | 38% | 22% |
Average Balance of New Mortgage Loans* | $312,801 | $296,506 | $286,913 | $252,602 |
*Originations are viewed one quarter in arrears to account for reporting lag.
Q4 2021 CIIR Credit Industry Indicator Summary
We introduced the TransUnion Credit Industry Indicator (CII) in 2021 to provide a consolidated view of the overall health and direction of the consumer credit market — looking at the components of consumer credit demand, supply, behavior and performance.
In Q4 2021, the CII increased by 16 points YoY to 115, a clear indicator the credit market has seen solid improvement over the past year.
Our view: Due to growing consumer confidence and lenders making credit available across the risk spectrum, consumer credit demand and supply have rebounded in a big way. Consumers have access to credit — and they’re using it — which is the sign of a healthy market.
Click here for more information on the Credit Industry Indicator.
For more information about the report, please register for the Q4 2021 Quarterly Credit Industry Insights Report Webinar.