Unsecured Personal Loans Credit Union – Lenders continued to grow new account originations in the non-prime segment of the market through the end of 2021, with consumer credit performance maintaining normal levels across auto, credit card, personal loans and mortgages. TransUnion’s (NYSE: TRU ) newly released Q4 2021 Credit Industry Intelligence Report (CIIR) found that loans to non-prime borrowers increased in 2020, while accounts originated during the pandemic continued to perform as well or better than loans in prior years.
The credit card market, in particular, saw the highest rate of new account growth in Q3 2021 (latest data available) with a record 20.1 million exits, of which 9.0 million were non-prime customers. Total card impressions were up 63% year-over-year in the quarter, and non-core impressions were up 75% from 5.1 million non-core impressions in Q3 2020. The non-prime risk range is defined as subprime risk (VantageScore 4.0 range 300-600) and adjacent prime risk (600-660 score range).
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“There was great uncertainty in the first months of the pandemic and many lenders chose to wait and see. The growing number of consumers in debt settlement programs has added to the uncertainty and questions about how they will fare. Customers would be billed after exiting these programs. Lending was lower than the main customers and financial institutions have taken their attention. Returning to market fundamentals and helping reduce risk,” said Charlie Wise, TransUnion’s senior vice president of research and consulting. By the end of 2021, most of the shelter programs have expired and lenders have seen consumers default on their loans. Lenders are poised for continued growth, including a return to the non-core consumer segment.
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Note: Quarterly arrears appear in arrears for Q4 2021 reporting delays.
Supply issues have affected sales volumes in the auto industry, resulting in vehicle trends remaining relatively flat. However, the overall forecast is based on the lower primary segment growing from 2.3 million in Q3 2020 to 2.4 million in Q3 2021. On the other hand, the mortgage industry has seen rapid growth throughout the pandemic. Sequence due to low interest rate environment. Although non-prime customers make up a portion of all issuances, the non-prime risk segment has also seen recent growth, with year-on-year growth of 17.6% in Q3 2021, although total issuances fell by -12.6% over the same period.
Despite the recent improvement in delinquencies in recent quarters, the rate of serious delinquencies remained near or below pre-pandemic levels thanks to expiring forbearance programs, which continued to restore lender confidence. Personal loan delinquent (DPD) loans 60+ days past due posted a seasonal increase of 3.00% in 4Q2021, but down from 3.48% seen in 4Q2019. Borrower-level 90+DPD for credit card reached 1.48% in Q4 2021, but shows a lower credit trend from 2.19% in Q4 2019.
To better assess the health of consumer credit, TransUnion analyzed the 12-month performance of loans issued in 2020 compared to previous years. All loan products have better or similar performance compared to accounts opened in 2018 and 2019.
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“As the economy continues to recover and the health of consumer credit remains strong, lenders will continue to expand access to credit across the risk spectrum, including to primary consumers, and originations are expected to increase. As consumers return to credit, credit growth may pick up.” has poured excess liquidity into consumer wallets. As this excess liquidity recedes, we expect demand for consumer credit to return to normal patterns,” Weiss said.
To learn more about the report, register for the Credit Industry Quarterly Reports webinar in Q4 2021. Read real insights on credit cards, personal loans, auto loans, mortgages and the Credit Industry Indicator.
The origination of the credit card industry showed sharp growth in Q3 2021, up 63.5% year-over-year to a record 20.1 million new accounts. Growth was seen across all risk levels, with 45% of distribution exits coming from lower origination customers – the highest share of exits in this market segment since 2010. Credit cards reached 196 million in the fourth quarter of 2021. Many card issuers use this as a growth strategy to expand access to credit and attract customers with low balances. The average customer balance was $5,127 in Q4 2021, up from $5,103 in Q4 2020, but down from the pre-pandemic average of $5,818.
“While card balances have improved slightly from a year ago, average balances are still below pre-pandemic levels. Balance growth is largely due to super-prime customers and card issuers are aligning their growth strategies with this behavior by offering more lines of credit to these customers. Card issuers are also encouraging growth.” uses new customer risk segments for Non-core customer emergence is increasing and customer performance has remained stable, particularly historically.
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The personal loan market has recovered significantly as lenders pulled back in the first quarter of the pandemic. It returned to pre-pandemic levels with 5.1 million in Q3 2021, up from 5.0 million loans in Q3 2019. In Q3 2021, the average new account balance increased by 23.8% to $7,104. This growth helped boost personal loans to $167 billion in Q4 2021 – an all-time high.
“The consumer lending market has returned to pre-pandemic levels, with balances higher than in Q4 2019. Strong outflow volumes, especially in the lower core segments, coupled with material balance growth, are a sign of lender confidence in consumer financial health.
In Q3 2021, the output figure for 2021 was 7.3 million due to lower vehicle inventories and a shortage of semiconductor chips. As a result of low supply and high demand, vehicle availability and prices suffered as the average auto loan balance (including new and used) increased to $26,976, a 14% year-over-year increase. . . Average monthly payments were also affected by the current environment and increased from $459 in the pre-pandemic quarter of 2019 to $531 in Q3 2021.
“Dealers continue to face vehicle supply challenges, and while the outlook for Q3 2021 remains relatively flat, uncertainty about when inventory issues will be resolved continues to grip the auto industry. This, along with rising vehicle prices for both used and new vehicles, is expected to impact vehicle sales for the remainder of 2022. However, consumer productivity remains modest, especially as pandemic resilience programs expire.”
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Mortgage originations started to slow from the peak seen in 2020, falling -13% to 3.4 million in Q3 2021. While this is well above pre-pandemic levels seen in Q3 2019 (2.3 million), rising interest rates have made rate protection and term refinancing attractive. These reviews are down -42% year over year. In contrast, cash-out returns were up 14% year-over-year, reflecting an increase in homeowners’ equity. The purchase volume remained stable. Therefore, the share of raw material purchases increased from 53% in the 3rd quarter of 2021 to 55% in the 3rd quarter of 2021. As consumer demand is high and housing inventory is low, this energy continues to drive home prices higher, with overall mortgage balances hitting record highs. $10.7 trillion – 9% annual growth and the highest annual growth rate since 2010.
“Due to the low interest rate environment in early 2021, most of the risk in recent quarters has been from rate and term refinancing. Many mortgage lenders have been laser-focused on handling this volume. As refinancing shrinks and customer numbers shrink, watch interest rates rise, mortgage lenders are now diversified.” is seeing growth.” It is becoming increasingly important for lenders to find homebuyer borrowers in the market. New consumer demographics such as the low- and middle-income consumer segment are relatively untapped. in line for donors. This will be an effective way to continue the year.
The TransUnion Credit Industry Indicator (CII) rose 16 points year-over-year to 115 in the 4th quarter of 2021, indicating that the credit market has improved significantly over the past year. Launched in 2021, the CII provides a comprehensive view of the overall state and direction of the consumer credit market, looking at elements of consumer credit demand, supply, behavior and performance. General development of CII in the past
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