CHICAGO, Dec. 13, 2017 (GLOBE NEWSWIRE) -- In spite of rising interest rates, the U.S. consumer credit market is poised to perform well in 2018, with well-managed delinquencies and continued wide access to credit across all products. TransUnion’s (NYSE:TRU) 2018 consumer credit forecast found that expected increases to GDP, personal income, total employment and the Housing Price Index, among other factors, will outweigh potential negatives such as increasing interest rates and slowing vehicle sales.
A PDF accompanying this announcement is available at
http://resource.globenewswire.com/Resource/Download/3fe9acc4-5cd8-4ed4-92ed-4945c3022d06.
A video accompanying this announcement is available at
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“From a credit performance standpoint, mortgage loan delinquencies are the biggest story. Serious mortgage delinquency rates are expected to decline materially next year, reaching levels not seen since 2005 when TransUnion began tracking these metrics. This will be driven primarily by strong employment and rising home prices,” said Matt Komos, vice president of research and consulting for TransUnion. “Unsecured personal loan delinquencies will also see very little movement and remain significantly lower than they were five years ago. While auto loan and credit card delinquency rates are expected to rise, these delinquencies are not unplanned in the sense that lenders continue to steer their respective portfolios in a fashion that suggests they are still cautiously taking on some risk.
“Despite expected interest rate rises, the prime rate remains well below historic norms and we believe it will remain at levels that can still be well managed by most consumers,” added Komos. “Expected balance growth across all products is a reflection of strong consumer sentiment rather than an indicator of consumers struggling to keep up with their obligations. Coupled with expectations of a strong economy, the consumer credit market is projected to remain on a healthy trajectory.”
5-Year Trends: Serious Borrower-Level Delinquency Rates for Key Credit Products** | ||||||||||||||
Credit Product | Q4 2013 | Q4 2014 | Q4 2015 | Q4 2016 | Q4 2017* | Q4 2018* | PCT Change in Last 5 Years (2013-2018) | |||||||
Auto Loans | 1.23 | % | 1.19 | % | 1.27 | % | 1.44 | % | 1.43 | % | 1.46 | % | +18.7% | |
Credit Cards | 1.60 | % | 1.48 | % | 1.59 | % | 1.79 | % | 1.86 | % | 1.96 | % | +22.50% | |
Mortgage Loans | 4.31 | % | 3.40 | % | 2.46 | % | 2.28 | % | 1.83 | % | 1.65 | % | (-61.7%) | |
Unsecured Personal Loans | 4.01 | % | 3.73 | % | 3.62 | % | 3.83 | % | 3.37 | % | 3.36 | % | (-16.21%) | |
*Projections; **Serious mortgage, auto loan and personal loan delinquencies are defined here as those with payments 60 or more days past due. Serious credit card delinquencies are defined as those with payments 90 or more days past due. |
For more information about the 2018 TransUnion forecast and to register for a webinar providing detailed projections, please visit www.transunioninsights.com/IIR. A direct link to the 2018 consumer credit forecast webinar may be found here.
Inside the Mortgage Forecast
Three Trends for 2018
Instant Analysis
“Rising home prices, solid underwriting criteria, and a strong economy have led to an extremely low level of risk in the mortgage industry, which will likely continue into 2018. While housing demand is expected to remain strong headed into the new year, the question will be how much of a purchase headwind will we face with tight supply of entry-level housing, rising interest rates, and expensive ‘move up’ options. Many existing homeowners, already having refinanced into a low-interest rate mortgage, may be unwilling or unable to ‘move up’ due to how expensive housing has become. That lack of mobility can, in turn, put pressure on the supply of entry-level housing. Additionally, there is uncertainty regarding the potential impact of current tax reform efforts. One potential upside may be felt in HELOC lending, as more homeowners opt to upgrade their existing housing through home improvement, as opposed to moving into a new home. Though HELOCs were somewhat forgotten over the past five years, this, combined with record levels of home equity, will likely lead to a HELOC resurgence in the next few years.”
60-Day+ Mortgage Delinquency Rate and Average Mortgage Debt per Borrower | |||||||||||||||||||||||||||||
Q4 2009 | Q4 2010 | Q4 2011 | Q4 2012 | Q4 2013 | Q4 2014 | Q4 2015 | Q4 2016 | Q4 2017* | Q4 2018* | ||||||||||||||||||||
7.16% | 6.65% | 6.15% | 5.38% | 4.31% | 3.40% | 2.46% | 2.28% | 1.83% | 1.65% | ||||||||||||||||||||
$190,324 | $186,488 | $185,594 | $184,753 | $187,228 | $187,311 | $189,914 | $194,415 | $200,935 | $205,534 | ||||||||||||||||||||
*Q4 2017 and Q4 2018 include projections |
Inside the Credit Card Forecast
Three Trends for 2018
Instant Analysis
“The credit card marketplace is a strong example of the risk-reward paradigm of credit. Lenders are continually looking for the right balance – providing credit cards to both the least risky and higher-risk consumers in the most prudent manner while also trying to control risk and generate reasonable returns for investors. Yes, delinquencies are slowly rising, but it’s happening at a time when many lenders feel they have the confidence to take on some risk. While the overall loss rate is also going up, the loss rate is expected to increase at a slower pace in 2017-2018 versus the compound annual growth rate since 2014. The data support their efforts: the subprime risk group only constitutes about 10.6% of all credit card accounts as of the third quarter of 2017. While higher than the previous year – 9.9% in the third quarter of 2016 – it still falls well short of levels observed during the recession, when 13.4% of all credit cards went to subprime consumers in the third quarter of 2009. On the balance front, we continue to see moderate increases, but this is to be expected as consumer confidence and GDP continue to strengthen.”
90-Day+ Credit Card Loan Delinquency Rate and Average Credit Card Loan Debt per Borrower | |||||||||||||||||||||||||||||
Q4 2009 | Q4 2010 | Q4 2011 | Q4 2012 | Q4 2013 | Q4 2014 | Q4 2015 | Q4 2016 | Q4 2017* | Q4 2018* | ||||||||||||||||||||
2.97% | 2.17% | 1.90% | 1.75% | 1.60% | 1.48% | 1.59% | 1.79% | 1.86% | 1.96% | ||||||||||||||||||||
$6,043 | $5,609 | $5,485 | $5,371 | $5,324 | $5,329 | $5,337 | $5,486 | $5,626 | $5,675 | ||||||||||||||||||||
*Q4 2017 and Q4 2018 include projections |
Inside the Auto Finance Forecast
Three Trends for 2018
Instant Analysis
“TransUnion anticipates many shifts in the auto loan market during the course of 2018. While the growth in auto loan balances is likely to continue to slow in 2018, we may see some exceptions to that trend, especially in early 2018. The impact of the hurricanes in Florida and Texas will likely result in up to 900,000 replacement vehicles being purchased, which would impact both total balances and debt per borrower in the early part of 2018. The shift from new to used vehicle purchases will also impact overall balances. As in recent years, we should see the usual seasonal shifts in serious delinquency rates. Delinquencies may fall nearly 20 basis points by the mid-point of 2018 before rising to conclude the year about three basis points higher than we expect them to be at the end of 2017.”
60-Day+ Auto Loan Delinquency Rate and Average Auto Loan Debt per Borrower | |||||||||||||||||||||||||||||
Q4 2009 | Q4 2010 | Q4 2011 | Q4 2012 | Q4 2013 | Q4 2014 | Q4 2015 | Q4 2016 | Q4 2017* | Q4 2018* | ||||||||||||||||||||
1.59% | 1.27% | 1.11% | 1.15% | 1.23% | 1.19% | 1.27% | 1.44% | 1.43% | 1.46% | ||||||||||||||||||||
$14,922 | $15,031 | $15,377 | $16,061 | $16,781 | $17,456 | $18,004 | $18,391 | $18,588 | $18,694 | ||||||||||||||||||||
*Q4 2017 and Q4 2018 include projections |
Inside the Personal Loan Forecast
Three Trends for 2018
Instant Analysis
“The consumer lending industry has moved past the difficulties of 2016, when FinTech lenders encountered funding challenges and subprime finance companies were facing regulatory uncertainty resulting from the CFPB’s pending small dollar rule. The volume of unsecured personal loans has rebounded exceptionally well in 2017; we expect more of the same in 2018, especially as banks and credit unions place a larger emphasis on this loan type. The fact that originations are skewing toward lower-risk consumers bodes well for the overall delinquency rate, and is especially important as consumer debt per borrower is expected to extend to nearly $8,500. This is significant considering that it would prove to be a 35% increase from levels seen just a few years ago at the end of 2013.”
60-Day+ Personal Loan Delinquency Rate and Average Personal Loan Debt per Borrower | |||||||||||||||||||||||||||||
Q4 2009 | Q4 2010 | Q4 2011 | Q4 2012 | Q4 2013 | Q4 2014 | Q4 2015 | Q4 2016 | Q4 2017* | Q4 2018* | ||||||||||||||||||||
4.98% | 4.78% | 4.20% | 3.93% | 4.01% | 3.73% | 3.62% | 3.83% | 3.37% | 3.36% | ||||||||||||||||||||
$6,650 | $6,138 | $5,895 | $5,904 | $6,247 | $6,741 | $7,360 | $7,640 | $8,066 | $8,461 | ||||||||||||||||||||
*Q4 2017 and Q4 2018 include projections |
TransUnion’s Forecast
TransUnion’s forecasts are based on various economic assumptions, such as gross domestic product, home prices, personal disposable income and unemployment rates. The forecasts could change if there are unanticipated shocks to the economy, such as if home prices unexpectedly fall. Better-than-expected improvements in the economy, such as precipitous drops in unemployment, could also impact these forecasts.
About TransUnion (NYSE:TRU)
Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.
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Contact | David Blumberg TransUnion |
david.blumberg@transunion.com | |
Telephone | 312-972-6646 |