With the holiday shopping season officially kicking off during
Black Friday next week, TransUnion’s (NYSE:TRU) just released Q3
2017 Industry Insights Report found that 195.9 million consumers
now have access to revolving credit such as bank-issued and private
label credit cards. According to the report, powered by
PramaSM analytics, this is the highest level of revolving
credit access since TransUnion began measuring the variable and is
greater than the 192.6 million consumers who had access to such
credit products in Q3 2016.
TransUnion also found that, as of Q3 2017, a record 142.5
million consumers had a balance on non-revolving loans. This is up
from 140.1 million in Q3 2016. Non-revolving loans are primarily
comprised of auto loans, mortgages, student loans and unsecured
personal loans.
The number of consumers with the aforementioned credit products,
especially revolving lines of credit, will more than likely grow
during the upcoming holiday shopping season. In November and
December 2016, TransUnion found that average originations for
private label credit cards doubled for online (2.00x) and discount
store (1.95x) retailers compared to average monthly originations
over the rest of the year (January through October)
“The third quarter of 2017 exhibited a lending market that
continued to operate in a stable manner, with consumers continuing
to gain access to credit and take advantage of that access,” said
Ezra Becker, senior vice president and head of research and
consulting for TransUnion. “However, we are beginning to see a
slowdown in originations, which may be a signal of saturation in
the lower-risk credit tiers and some pull-back in lender risk
appetite in the higher-risk tiers.
“Despite the slowdown, we anticipate a robust holiday shopping
season. The University of Michigan’s consumer sentiment measure
rose 4% this September compared to last, demonstrating that
consumers have continued positive expectations regarding the
overall economy. As a result, we expect this will lead to strong
consumer credit activity during the upcoming holiday season.”
TransUnion’s analysis found that average private label card
originations in the holiday season (defined as November and
December) for 2016 was 148% of the average monthly originations in
the January through October timeframe. This is tracking in line
with recent rises observed in 2015 (156%) and 2014 (164%). “On
average, consumers are about 1 ½ times more likely to open a
private label credit card in the holiday season compared to any
other month of the year. Much of this increase is due to the credit
offers extended by retailers and their lending partners in
anticipation of the shopping season,” Becker added.
Please visit TransUnion’s Industry Insights Report
website for more charts and details about the Q3 2017 Industry
Insights Report or to register for TransUnion's Q3
2017 Industry Insights Webinar.
Total Credit Balances Rise despite Slowdown in New
Credit Card Accounts Q3 2017 IIR Credit Card
SummaryTransUnion’s Q3 2017 Industry Insights Report found
that total credit card balances continued to grow on an annual
basis, rising 7% to $731 billion in Q3 2017 from $683 billion in Q3
2016. MSAs experiencing the largest annual credit card debt per
borrower increases included Miami (+5.5%) and Houston (+4.7%), both
areas impacted by hurricanes during the month of September. Even as
balances rose in those markets and elsewhere, the number of overall
new credit card accounts decreased 12.1% between Q2 2016 and Q2
2017 (originations are viewed one quarter in arrears to ensure all
accounts are included in the data). Q3 marked the third quarter in
a row new account growth had decreased on an annual basis. While
serious delinquency rates increased to 1.68% in Q3 2017 from 1.53%
in Q3 2016, they remain relatively low on a historical basis and
are in line with TransUnion’s forecast from last December that
pointed to a year-end 1.65% delinquency rate.
Instant Analysis “The robust increase in credit
card balances is a reflection of new account growth observed in
2016. Consumers with new access to credit cards clearly used
them and built balances. Not surprisingly, subprime consumers
experienced the largest annual increase in serious delinquency
rates, though we also observed new account balance declines in this
group as well. Overall, the market is performing in line with our
expectations at the beginning of the year and we do not anticipate
any marked changes to this sector at the end of the year.”-
Paul Siegfried, senior vice president and credit card business
leader at TransUnion
Q3 2017 Credit Card Trends
Credit Card Lending
Metric |
Q3 2017 |
Q3 2016 |
Q3 2015 |
Q3 2014 |
Number of Credit Card
Loans |
414.3
million |
398.5 million |
374.2 million |
361.2 million |
Borrower-Level Delinquency Rate (90+
DPD) |
|
1.68% |
|
|
1.53% |
|
|
1.44% |
|
|
1.35% |
|
Average Debt Per
Borrower |
$5,483 |
|
$5,323 |
|
$5,229 |
|
$5,251 |
|
Prior Quarter Originations* |
15.5 million |
17.6 million |
15.3 million |
13.7 million |
Average New Account Credit Lines* |
$5,307 |
|
$5,252 |
|
$5,047 |
|
$4,920 |
|
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
Q3 2017 Credit Card Loan Performance by
Age Group
Age/Variable |
90+ DPD |
Annual Pct. Change |
Average Loan Balances Per
Consumer |
Annual Pct. Change |
Gen Z (1995 – present) |
2.55 |
% |
15.5 |
% |
$ |
1,101 |
28.5 |
% |
Millennials (1980-1994) |
2.48 |
% |
5.6 |
% |
$ |
4,028 |
12.0 |
% |
Gen X (1965-1979) |
2.10 |
% |
7.7 |
% |
$ |
6,997 |
4.9 |
% |
Baby Boomers (1946-1964) |
1.11 |
% |
8.8 |
% |
$ |
6,351 |
0.8 |
% |
Silent (Until 1945) |
0.74 |
% |
10.2 |
% |
$ |
3,928 |
0.2 |
% |
Auto Loan Market Shifting Toward Less Risky
Consumers Q3 2017 IIR Auto Loan
SummaryFor the fourth consecutive quarter, auto loan
originations decreased on a year-over-year basis, declining 2.2%
between Q2 2016 and Q2 2017. The decline was driven by a 5.9% drop
in subprime, near prime and prime loan openings. This was partially
offset by a 3.2% rise in loans originated to the least risky
consumers in the prime plus and super prime risk categories over
the same time period. As a result of this shift, 2.3 points of
market share have shifted from subprime, near prime and prime to
prime plus and super prime. While overall auto loan balances rose
5.9% between Q3 2016 and Q3 2017, this marked the lowest
year-over-year growth rate since Q3 2012. As balance growth slowed,
serious auto loan delinquency rates (60+ DPD) rose seven basis
points in the last year to close Q3 2017 at 1.40%.
Instant Analysis “Though serious auto loan
delinquency rates are slowly rising, we still do not believe this
is a cause for concern. The recent uptick in delinquencies was
driven primarily by ‘relaxed’ underwriting standards from recent
years, which drove non-prime origination growth. The recent decline
in originations is due to the tightening of underwriting
requirements and the slowing demand for new vehicles. Despite fewer
originations, there is evidence that more people will be opening
auto loans in the near term. In September, U.S. light vehicle sales
increased for the first time this year on an annual basis. Also,
there will likely be several thousand new vehicles purchased as a
result of the hurricanes in Florida and Texas.”- Brian
Landau, senior vice president and automotive business leader at
TransUnion
Q3 2017 Auto Loan Trends
Auto Lending Metric |
Q3 2017 |
Q3 2016 |
Q3 2015 |
Q3 2014 |
Number of Auto Loans |
78.6
million |
74.8 million |
69.8 million |
64.6 million |
Borrower-Level Delinquency Rate (60+
DPD) |
|
1.40% |
|
|
1.33% |
|
|
1.19% |
|
|
1.20% |
|
Average Debt Per
Borrower |
$18,567 |
|
$18,361 |
|
$17,946 |
|
$17,351 |
|
Prior Quarter Originations* |
7.1 million |
7.3 million |
7.2 million |
6.8 million |
Average Balance of New Auto
Loans* |
$20,653 |
|
$20,436 |
|
$20,097 |
|
$19,524 |
|
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
Q3 2017 Auto Loan Performance by Age
Group
Age/Variable |
60+ DPD |
Annual Pct. Change |
Average Loan Balances Per
Consumer |
Annual Pct. Change |
Gen Z (1995 – present) |
1.86 |
% |
7.0 |
% |
$ |
13,796 |
2.8 |
% |
Millennials (1980-1994) |
1.87 |
% |
3.4 |
% |
$ |
17,574 |
2.0 |
% |
Gen X (1965-1979) |
1.59 |
% |
3.0 |
% |
$ |
20,798 |
1.9 |
% |
Baby Boomers (1946-1964) |
0.86 |
% |
5.2 |
% |
$ |
18,514 |
0.6 |
% |
Silent (Until 1945) |
0.76 |
% |
9.2 |
% |
$ |
14,608 |
-1.4 |
% |
Mortgage Delinquency Rates Continue Extended
Decline Q3 2017 IIR Mortgage Loan
SummaryThe serious mortgage borrower delinquency rate (60+
DPD) declined approximately 16% on an annual basis to 1.91% at the
end of Q3 2017. Year-over-year delinquency rates have consistently
dropped each quarter since Q3 2010, now reaching the lowest point
since the recession. The only state not to experience a yearly
mortgage delinquency decline was Alaska, which continues to
struggle from lower oil prices. The total number of mortgages
outstanding increased by nearly 1% in the last year to 52.7
million, continuing the previous quarter’s annual growth and
reversing a prior trend of yearly declines that had lasted since Q4
2014. While average mortgage debt per borrower rose to $199,417, a
growth trend not broken since Q1 2005, average new account balances
– measured in Q2 2017 due to reporting lag – declined by 2.4% in
the last year to $224,502. The annual drop in new account balances
is likely a reflection of the decline in refinance origination
share from 37% in Q2 2016 to 33% in Q2 2017, per Ellie Mae, as
refinance mortgages tend to be at higher balances than purchase
mortgages.
Instant Analysis “Serious mortgage delinquency
rates continue to drop to new post-recession lows, indicating there
may be opportunities to responsibly expand access. We did note that
the shape of the delinquency trendline has been flat during the
second and third quarters of 2017, suggesting that a natural floor
for delinquencies might be forming. However, a similar period of
flat delinquencies occurred between the second and fourth quarters
of 2016, before they once again began to decline. A higher interest
rate environment and market saturation have negatively impacted
refinance market share, and we anticipate it to decline even
further. Tight supply, especially for starter homes, will pose some
growth headwinds, though a strong economy and a high demand for
housing will likely overcome that and lead to growth in home
purchase activity.” - Joe Mellman, senior vice
president and mortgage business leader at TransUnion
Q3 2017 Mortgage Loan Trends
Mortgage Lending
Metric |
Q3 2017 |
Q3 2016 |
Q3 2015 |
Q3 2014 |
Number of Mortgage
Loans |
52.7
million |
52.3 million |
52.9 million |
53.6 million |
Borrower-Level Delinquency Rate (60+
DPD) |
|
1.91% |
|
|
2.29% |
|
|
2.50% |
|
|
3.51% |
|
Average Debt Per
Borrower |
$199,417 |
|
$193,489 |
|
$189,428 |
|
$186,577 |
|
Prior Quarter Originations* |
1.9 million |
2.0 million |
1.9 million |
1.4 million |
Average Balance of New Mortgage
Loans* |
$224,502 |
|
$230,120 |
|
$221,753 |
|
$195,514 |
|
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
Q3 2017 Mortgage Loan Performance by
Age
Age/Variable |
60+ DPD |
Annual Pct. Change |
Average Loan Balances Per
Consumer |
Annual Pct. Change |
Gen Z (1995 – present) |
1.18 |
% |
-10.4 |
% |
$ |
136,480 |
7.3 |
% |
Millennials (1980-1994) |
1.54 |
% |
-17.9 |
% |
$ |
207,201 |
6.4 |
% |
Gen X (1965-1979) |
2.38 |
% |
-17.0 |
% |
$ |
228,735 |
2.6 |
% |
Baby Boomers (1946-1964) |
1.66 |
% |
-16.3 |
% |
$ |
180,752 |
1.2 |
% |
Silent (Until 1945) |
1.85 |
% |
-8.8 |
% |
$ |
149,343 |
1.1 |
% |
Personal Loan Balances Reach All-Time High as
Delinquency Rates Decline Q3 2017 IIR Personal
Loan SummaryPersonal loan balances reached their all-time
high in Q3 2017, rising $5 billion to close the quarter at $112
billion. Personal loan debt levels per borrower rose to $8,017 in
the same timeframe. Much of the recent rise in personal loan
balances can be attributed to the less risky credit risk tiers. For
the first time since Q1 2016, prime and above prime originations
increased by double-digit percentages between Q2 2016 and Q2 2017,
while subprime originations dropped for the fourth consecutive
quarter, declining 7.1% on an annual basis. Serious delinquency
rates (60+ DPD) in Q3 2017 declined to 3.13%, a marked improvement
from recent third quarters. During the previous five third quarters
(2012-2016), the average serious delinquency rate was 3.60% and
fell between a range of 3.48% and 3.88%.
Instant Analysis “Unsecured personal loan
balances continue to increase, as more prime consumers are choosing
to use personal loans to meet their credit needs. At the same
time, we’ve seen slower growth among non-prime balances, helping to
drive the overall delinquency rate lower. Millennials and Gen Z are
contributing to the stronger industry performance. Both groups have
increased their average balances per borrower and improved their
delinquency rates.”- Jason Laky, senior vice president and
consumer lending business leader at TransUnion
Q3 2017 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q3 2017 |
Q3 2016 |
Q3 2015 |
Q3 2014 |
Total Balances |
$112 billion |
$100 billion |
$83 billion |
$66 billion |
Number of Unsecured Personal Loans |
17.5
million |
16.2 million |
14.3 million |
12.5 million |
Borrower-Level Delinquency Rate (60+
DPD) |
|
3.13% |
|
|
3.53% |
|
|
3.51% |
|
|
3.61% |
|
Average Debt Per
Borrower |
$8,017 |
|
$7,755 |
|
$7,258 |
|
$6,673 |
|
Prior Quarter Originations* |
3.6 million |
3.6 million |
3.6 million |
3.2 million |
Average Balance of New Unsecured Personal
Loans* |
$6,140 |
|
$5,475 |
|
$5,520 |
|
$4,847 |
|
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
Q3 2017 Unsecured Personal Loan
Performance by Age
Age/Variable |
60+ DPD |
Annual Pct. Change |
Average Loan Balances Per
Consumer |
Annual Pct. Change |
Gen Z (1995 – present) |
5.66 |
% |
-20.4 |
% |
$ |
3,023 |
23.6 |
% |
Millennials (1980-1994) |
4.23 |
% |
-16.8 |
% |
$ |
6,864 |
9.1 |
% |
Gen X (1965-1979) |
3.09 |
% |
-12.0 |
% |
$ |
9,247 |
4.3 |
% |
Baby Boomers (1946-1964) |
2.25 |
% |
-6.7 |
% |
$ |
8,291 |
1.2 |
% |
Silent (Until 1945) |
2.22 |
% |
-2.4 |
% |
$ |
6,908 |
-3.0 |
% |
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,
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This allows a variety of markets and businesses to better manage
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and Asia. Through the power of information, TransUnion is working
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worldwide. We call this Information for
Good. http://www.transunion.com/business
Contact Dave
BlumbergTransUnion
E-mail dblumberg@transunion.com
Telephone 312-972-6646
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