CHICAGO, IL--(Marketwired - November 16, 2015) - Consumer credit markets continued their strong performance in the third quarter, according to TransUnion's (
On the debt front, aggregate revolving credit balances increased by $13.5 billion between Q3 2014 and Q3 2015. Non-revolving debt also rose by $249.5 billion over the same period. At the consumer level, however, average revolving balances decreased by 3.9% in the last year to $10,931 in Q3 2015. This decline at the consumer level was driven in part by increased access to credit by non-prime consumers, who generally have lower credit limits. Non-revolving debt per consumer also decreased by 0.3% over the year, ending at an average of $113,973 per consumer in Q3 2015.
"Consumer credit performance continued to be healthy in the third quarter of 2015," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "Delinquencies for mortgages continued to drop, while both auto and credit card default rates remained near all-time lows. Overall balance growth reflects consumer optimism and increased access to credit. Lenders are offering credit to consumers across the risk spectrum, and consumers are using that credit responsibly. We are poised to continue this positive momentum into the holiday season."
Consumer Delinquency and Debt Changes in the Last Year | ||||||||
Loan Type | Q3 2015 Serious Delinquency Rate |
Yearly Pct. Change |
Q3 2015 Debt Per Borrower |
Yearly Pct. Change |
||||
Mortgage | 2.40% | (-28.5%) | $189,039 | 1.5% | ||||
Auto | 1.16% | 0.0% | $17,942 | 3.4% | ||||
Credit Card | 1.43% | 6.7% | $5,232 | (-0.3%) | ||||
These results, along with the findings discussed below, were reported in the latest TransUnion Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.
TransUnion Insights: Inside the Auto Loan Market
The Industry Insights Report found that auto balances surpassed $1 trillion in Q3 2015, an 11.1% increase from Q3 2014. In the past year, auto loan balances have increased $101 billion to $1.008 trillion in Q3 2015.
"As total auto loan balance rises, we're seeing controlled and deliberate growth by lenders," said Jason Laky, senior vice president and automotive business leader for TransUnion. "Consumers continue to feel confident in their employment or job prospects, and their appetite for new auto loans reflects this confidence."
"More consumers have access to auto loans, yet delinquencies remain low as they continue to responsibly manage their payments," said Laky. "Consumers are taking on more and bigger auto loans in today's low-rate environment, but we see no cause for concern as delinquencies remain steady."
TransUnion Insights: Inside the Credit Card Market
TransUnion's report found that credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included), reached the highest level since Q3 2009. Total originations reached 15.2 million, a 12.2% increase from 13.5 million in Q2 2015. "Credit card originations are increasing at a faster pace in the last year, indicating that consumers have an appetite for credit," said Paul Siegfried, senior vice president and credit card business leader for TransUnion.
The credit card delinquency rate (the rate of borrowers 90 days or more delinquent on their general purpose credit cards) rose nearly 7% from 1.34% to 1.43% in Q3 2015. The delinquency rate, though, remains in a similar range to what has been observed the last few years and is nearly half of the Q3 2009 reading of 2.76%.
"The growth in total bankcard balances, combined with stable delinquency levels, indicates consumers are comfortable with and willing to use their credit cards," said Siegfried. "The current credit card environment also suggests a stabilization in the supply and demand equilibrium for credit."
"Card issuers are seeking opportunities to lend to non-prime consumers, and are slowly opening up credit to these consumers," said Siegfried. "Despite non-prime consumers increasingly gaining access to credit cards, balance delinquency rates remain steady."
TransUnion Insights: Inside the Mortgage Market
The latest Industry Insights Report found that the mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) declined nearly 30% from 3.36% in Q3 2014 to 2.40% in Q3 2015. The delinquency rate has now declined 65% from its Q1 2010 peak of 6.94%.
"The decline in serious mortgage delinquencies is continuing and even ramping up, with steadily increasing absolute drops over the last year," said Joe Mellman, vice president and mortgage business leader for TransUnion. "We believe this is due to a combination of factors, including strong performance by recent vintage mortgage loans, improving home prices, and the continued funneling of delinquent accounts through the foreclosure process."
"This is now the third straight quarter where we've not only seen year-over-year mortgage origination growth, but also significant increases in the higher risk populations of near prime and subprime -- hinting at a loosening of credit and/or a change in the mix of borrowers seeking mortgages," said Mellman.
Please visit http://www.transunioninsights.com/IIR for more charts and details about TransUnion's Q3 2015 Industry Insights Report.
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