- Personal loan balances surpassed $100 billion for the first time in Q3 2016, with $17 billion of balance growth occurring in the last year.
- More than 15 million consumers had a personal loan in the third quarter of 2016. The number of consumers with a personal loan grew by 1.5 million between Q3 2015 and Q3 2016.
Consumer participation in this market is at its highest level since the end of the Recession.
Outstanding personal loan balances and consumers
Despite surpassing $100 billion, total personal loan balances experienced the slowest third quarter growth rate since Q3 2013. In the third quarter of 2016, balances grew 20.9%, down from 24.9% in Q3 2015 and 25.5% in Q3 2014.
Investor concerns and the subsequent impact on FinTech lending certainly contributed in part to some of the lower growth rates we saw in the last quarter. However, consumer appetite for personal loans is expected to grow as the economy thrives, and FinTechs will remain an important lending source.
FinTech lenders are growing share in the personal loan market
FinTech lender share of originated personal loans has more than tripled since 2013. FinTech originations reached 26% of all personal loans in Q2 2016, up from 8% in Q2 2013 and 16% in Q2 2014. Originations are viewed one quarter in arrears to ensure all accounts are reported and included in the data. In total, more than 3.57 million personal loans were originated in the second quarter, down 0.5% from 3.58 million in Q2 2015.
Personal loan balances originated by lender type
Growth has been widespread—personal loan originations have shifted materially from subprime to the higher credit bands. In Q2 2016, near prime originations declined 4.7% and prime originations declined 2.7%, while both subprime and super prime originations grew by 3.2%, compared to Q2 2015. A prior TransUnion analysis found that FinTechs were outpacing traditional lenders in personal loans originated to near prime and prime borrowers.
Personal loan originations by risk tier
The decline in near prime and prime originations reflects the challenges faced by some FinTech lenders. Offsetting this, banks and credit unions are expanding in super prime borrowers, while traditional finance companies continue to expand in subprime.
Trends in the Unsecured Personal Loan Market
|Unsecured Personal Loan Metric||Q3 2016||Q3 2015||Q3 2014||Q3 2013|
|Delinquency Rate (60+ DPD) Per Borrower||3.30%||3.32%||3.68%||3.63%|
|Average Debt Per Borrower||$7,745||$7,102||$6,501||$6,035|
|Prior Quarter Originations*||2.99 million||2.63 million||2.40 million||2.03 million|
*Note: Originations are viewed one quarter in arrears to account for reporting lag.