Economic Pressures Continue to Drive Growth in the Credit Card and Personal Loan Sectors

Even as interest rates remain high, the consumer credit market shows stability as many continue to use credit to manage higher costs.

According to TransUnion’s newly published Q1 2024 Quarterly Credit Industry Insights Report (CIIR), while total new credit lines were down 2.6% in a tighter origination environment, several credit card metrics saw steady growth, including total number of bankcards, average new bankcard account credit lines, and total number of US consumers who carry a bankcard balance. 

“Many consumers are choosing to take advantage of credit products that can help them manage their rising monthly household expenses — despite these products potentially having higher interest rates relative to recent history,” Michele Raneri, Vice President and Head of US Research and Consulting at TransUnion. “The short-term pressure of inflation poses a more pressing problem than the potential impact of higher interest rate credit — which includes higher monthly debt service payments.”

Bankcards and unsecured personal loans continued to see growth despite higher interest rates

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

One trend lenders should follow closely: Delinquencies continued to rise across credit cards, mortgages and auto, and those rates will likely increase if the unemployment rate doesn’t remain at historic lows.

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.

Consumer credit trends in the credit card sector: Q1 2024

While origination volume was still above pre-pandemic levels, bankcard originations were down 6.3% YoY in Q4 2023, representing two consecutive years of a fourth-quarter, YoY decline in originations. Other insights from the report include:

• The origination volume remained 2.3% above 2019 levels at 19.3 million
• Super prime saw its highest origination volume quarter since 2005, while all other risk tiers saw a YoY decline
• Total balances increased 11.3% YoY and remained above $1 trillion for the second consecutive quarter
• Prime and below risk segments have held the majority of balances for the past three quarters
• Average debt per borrower increased by 8.5% YoY to $6,218
• Borrower-level 90+ DPD increased by 29 bps YoY to 2.55%, while vintage performance deteriorated across all risk tiers 

Our view: We’re seeing significant bankcard balance growth across all risk tiers, and demand for credit is still strong (despite relatively high interest rates) as consumers continue to tap credit to manage expenses brought on by high inflation. However, delinquencies increased and growth has slowed — making these trends to watch.

Q1 2024 credit card trends 

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

To access additional 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.

Consumer credit trends in the personal loan sector: Q1 2024

Led by super prime, unsecured personal loan balances ticked upward, growing 9% YoY in Q1 2024. Other insights from the report include:

• Super prime personal loan balances experienced double-digit growth
• The average account balance increased by nearly 5% YoY to $8,737, led by subprime and followed by super prime
• Balance per consumer also grew by nearly 5% YoY to $11,829
• Unsecured personal loan originations were down (at 5 million for Q4 2023), and contraction was seen across all risk tiers with the exception of super prime which grew by 12.6% YoY
• Borrower-level 60+ DPD delinquencies fell YoY in Q1 2024 (down to 3.75%); however, only subprime declined while all other risk tiers saw increases YoY
• On a vintage basis, the delinquency rate for Q1 2023 originations through January 2024 was much lower than Q1 2022 originations over the same performance period — but remained elevated over Q1 2021 originations

Our view: Unsecured personal loan originations were down slightly YoY as lenders continued to use tight underwriting standards and focus on lower-risk borrowers. The tighter underwriting standards likely led to a YoY decline in overall delinquencies. After three years, total balance growth also slowed, with the YoY increase of 9% representing the first quarter since Q4 2021 that saw only a single-digit increase in total balances.

Q1 2024 unsecured personal loan trends

 *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.

Consumer credit trends in the mortgage sector: Q4 2023

The mortgage sector is still lagging, largely due to mortgage rates which reached more than a two-decade high in Q4 2023. Other insights from the report include:

• Origination volumes were down 11% YoY while continuing to be driven by purchase originations
• FHA mortgage originations were up 9% YoY, the first loan type to register a YoY increase in two years
• 60+ DPD consumer-level delinquencies were up to 1.14% in Q1 2023 but still remained below pre-pandemic rates
• The 2022 resurgence in home equity lending slowed somewhat in Q4 2023; HELOCs were down 17% and HELOANs down 4% YoY
• Gen X and Baby Boomers had the highest share of HELOC originations at 39% and 30%, respectively, and HELOANs at 35% and 30%, respectively

Our view: High interest rates continued to suppress the mortgage market, keeping many would-be homebuyers on the sidelines until rates begin dropping. While originations remained down YoY, the rates of decline continue to decelerate, which may be a sign some consumers are tired of waiting. Delinquencies continued to rise (a trend worth monitoring) as inflation and other economic factors persist in impacting consumers’ wallets.

Q1 2024 mortgage trends 

* 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.

Consumer credit trends in the auto sector: Q1 2024

Following trends observed last year, challenges with affordability remained and originations were once again down as compared to 2019 across all risk tiers — with the largest declines seen among below prime risk tiers. Other insights from the report include:

• Q4 2023 saw 5.8 million originations — in line with the total one year ago
• The new/used split continued to trend back toward its pre-pandemic norm
• Leasing for Q1 2024 represented 24% of new vehicle registrations, up from 19% in Q1 2023 but still well below the 30% seen in Q1 2020
• The average amount financed, monthly payment and term length all remained flat for both new and used vehicles YOY
• Account-level 60+ DPD delinquency saw an uptick to 1.33% in Q1 2024

Our view: Higher interest rates, increasing lender pullback and cross-wallet inflation have made affordability a challenge for the used car market, specifically for below prime consumers. While some brands continued to see lingering shortages, new vehicle inventories are recovering from their pandemic-era lows, giving the leasing market a boost. Higher delinquencies are likely to further constrain loan availability, potentially keeping the market tempered until interest rates begin to see declines.

Q1 2024 auto loan trends

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 and 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. 

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