Q3 2015 Industry Insights: Mortgage, Auto, Credit Card and Consumer Loan Trends

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Recently, TransUnion released our Q3 2015 Industry Insights Report, which offers a quarterly overview of the entire credit-active U.S. population.

I highlighted some of the key takeaways from the report in a recent webinar, and presented overarching trends in the consumer credit market. The report and corresponding webinar offer detailed analysis of five sectors: Credit card (bankcard and private label cards), auto, mortgage, HELOC and consumer loans. Most importantly, we break down these trends by credit tier to share insights as it relates to consumer risk performance. Strong economic fundamentals contributed to a healthy, well-balanced credit market for Q3 2015. Gas prices continued to fall throughout the quarter, unemployment stayed low and wage growth accelerated, leading to overall consumer confidence. As a result, consumers are in a better position to manage their loans and make timely payments.

Although, aggregate revolving credit balances and non-revolving debt increased by $13.5 billion and $249.5 billion, respectively, there was a decrease at the average consumer level.

Between Q3 2014 and Q3 2015, the average revolving balances for individual consumers decreased by 3.9% to $10,931, primarily attributed to decreasing average HELOC balance (for consumers with a HELOC balance). Additionally, non-revolving debt per consumer decreased by 0.3% over the year, closing out the quarter with an average of $113,973. This is primarily caused by the sluggish mortgage market.

The ongoing drop in delinquency rates continued through Q3 2015 for mortgage and HELOC while auto and credit card remained stable to last year’s performance. Overall, delinquencies remained at low levels across all sectors, which confirms the health of the credit market especially as we enter the holiday season.

Growth occurred in overall credit card balances as more consumers acquired access to credit during the quarter. Between Q3 2014 and Q3 2015, the total number of consumers with credit cards increased by 4.3% from 125.4 million to 130.8 million. Outstanding balances, as a result, increased by 4.9% year over year, and reached $744 billion for the quarter.

The credit card market’s consistent and strong growth is also a result of more subprime and near prime consumers opening new lines of credit. Up to 33 million more consumers in this risk group opened new accounts throughout the quarter, but their available credit lines are significantly lower than consumers in the prime, prime plus and super prime risk tiers.

We noted a very similar, positive uptick in the auto sector. The average outstanding debt balance increased by 11.1% year over year, exceeding the $1 trillion mark. Two notable shifts caused the boost in the auto market. For one, the total number of consumers with an auto loan increased from 70 million in Q3 2014, to a new high of 74 million in Q3 2015. Additionally, the average consumer balance for auto loans increased to about the $18,000 mark. On the heels of a strong labor market, the number of consumers getting auto loans and entering leases also rose by 7% year over year. As APRs have decreased and loan terms have increased, more consumers, especially those in the non-prime risk tiers, are opening auto loans. This combination has led to monthly loan payments decreasing by approximately 7% and even more consumers financing and leasing higher-priced vehicles.

To acquire additional insights and explanation, you can access the on-demand webinar and presentation here.

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