Findings from the newly released Q4 2023 Quarterly Credit Industry
Insights Report (CIIR) from TransUnion (NYSE: TRU) reveal that
credit card debt is at a historical high, driven in part by
Millennials further building on their credit portfolios. This comes
at a time when an anticipated reduction in interest rates over the
course of the coming year may open up new avenues to more
affordable credit.
Bankcard balances reached a new record in Q4 2023, surpassing
the $1 Trillion mark for the first time on the back of 13% growth
year-over-year (YoY). Balances increased across all risk tiers, led
by subprime which grew 32% YoY to $105 billion. Generationally, the
Gen X share of bankcard balances continued to be the largest
(33.8%) while the Millennial share (29.4%), for the second straight
quarter, surpassed that of Baby Boomers (26.7%). Millennials were
the overall share leader in originations in Q3 2023, accounting for
29.6% of all new bankcard originations.
“Inflationary pressures and higher-than-expected living costs
have led to many consumers turning to bankcards to help make ends
meet in recent quarters, and Millennials are no exception,” said
Michele Raneri, vice president and head of U.S. research and
consulting at TransUnion. “It’s worth watching how this generation
uses credit in the coming year, one which will likely see some
positive economic developments play out, but also challenges. Among
these challenges will be the end of the one-year on-ramp to student
loan payment resumption, something that may impact many consumers
in this generational group.”
Millennials Share of Bankcard Balances
Surpassed That of Baby Boomers for the First Time in
2023
|
Q4 2020 |
Q4 2021 |
Q4 2022 |
Q4 2023 |
Gen Z |
2.5% |
3.7% |
5.2% |
6.3% |
Millennial |
23.8% |
26.0% |
28.3% |
29.4% |
Gen X |
33.9% |
33.6% |
33.6% |
33.8% |
Baby Boomers |
33.6% |
31.2% |
28.4% |
26.7% |
Silent |
6.2% |
5.5% |
4.5% |
3.8% |
At the same time, originations for both unsecured personal loans
as well as home equity lending products were down YoY. This
development is interesting as both products potentially offer
consumers and homeowners lower-interest options to refinance
high-cost credit card debt. Unsecured personal loans in Q3 2023
were down 10% YoY, which is the fourth consecutive quarter of
decreasing origination volume, as lenders show more scrutiny in
their lending decisions and lenders in the FinTech sector face
continued capital constraints. While home equity lending remains
stronger than prior to the pandemic, both HELOC and HELOAN
originations were down significantly YoY in Q3 2023 – reflecting
declines of 29% and 8%, respectively – as more homeowners have been
holding off from tapping into available home equity while interest
rates remain high.
“If the expected Fed interest rate cuts over the course of 2024
take place, lenders may find opportunity as consumers carrying
elevated card balances seek to lower their monthly payments by
refinancing high-cost debt into a lower interest product,” said
Raneri. “Consumers should know their credit scores and work to
improve them where possible. This will ensure they are as
well-positioned as they can be to take advantage of those lower
rates if the opportunity arises.”
Credit balances continue to rise as TransUnion’s Credit Industry
Indicator (CII) fell to 107 in Q4 2023, its lowest since Q1 2021,
just before the post-pandemic surge in credit usage. Multiple
factors played a role in this drop, including slowing new credit
demand and supply as well as rising delinquency rates. The CII is a
quarterly measure of depersonalized and aggregated consumer credit
health trends that summarizes movements in credit demand, credit
supply, consumer credit behaviors and credit performance metrics
over time into a single indicator. Examples of data elements
categorized into these four pillars include: new product openings,
consumer credit scores, outstanding balances, payment behaviors and
more than 100 additional variables. Increases in the CII level
indicate overall positive trends in the health of the credit
market.
To learn more about the latest consumer credit trends, register
for the Q4 2023 Quarterly Credit Industry Insights Report
webinar. Read on for more specific insights about credit cards,
personal loans, auto loans and mortgages.
Bankcard balances surpass $1 Trillion as average credit
lines per consumer reach an all-time high
Q4 2023 CIIR Credit Card Summary
Bankcard originations were down 7% YoY in Q3 2023, representing
the second consecutive quarter of annual decline. The largest
percentage of originations occurred among the borrowers in the
super prime risk tier followed closely by prime borrowers. Looking
at borrower generations, Millennials led the way in share of
originations, accounting for nearly 30%. Total bankcard balances
surpassed the $1 Trillion mark for the first time in Q4 2023,
representing growth of 13% YoY. Average balance per consumer was a
significant part of the total balance growth and increased by 10%
YoY to an all-time high of $6,360. At the same time, the number of
active cardholders carrying a balance continued to steadily
increase over the past 12 quarters. Total credit lines grew 8% YoY.
In terms of performance, 90+ Days Past Due (DPD) consumer level
delinquencies increased by 32bps YoY to 2.59% while 90+ DPD
balance-level delinquencies increased by 65bps YoY to 2.17%, which
marks the highest level in a decade.
Instant Analysis
“A pullback in nonprime issuance was a primary
driver in the YoY decline in Q3 2023 originations and breaks the
historical seasonal pattern. While delinquencies in Q4 2023 were
elevated, they were in line with the expected forecasts given
historic non-prime originations and balance growth. We will be
carefully watching to see if typical seasonal patterns will return
based on liquidity events such a tax returns and annual wage
growth.”
- Paul Siegfried, senior vice
president and credit card business leader at
TransUnion
Q4 2023 Credit Card Trends
Credit Card Lending Metric (Bankcard) |
Q4 2023 |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Number of Credit Cards |
542.6 million |
518.4 million |
485.9 million |
454.9 million |
Borrower-Level Delinquency Rate (90+ DPD) |
2.59% |
2.26% |
1.48% |
1.30% |
Total Credit Card Balances |
$1.05 Trillion |
$931 billion |
$785 billion |
$740 billion |
Average Debt Per Borrower |
$6,360 |
$5,805 |
$5,127 |
$5,103 |
Number of Consumers Carrying a Balance |
169.9 million |
166.0 million |
159.5 million |
151.8 million |
Prior Quarter Originations* |
20.1 million |
21.6 million |
20.1 million |
12.3 million |
Average New Account Credit Lines* |
$5,673 |
$5,226 |
$4,468 |
$3,820 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.For more credit card industry information, click
here for episodes of Extra Credit: A Card and Banking Podcast by
TransUnion. Click here for a Q4 2023 credit card infographic.
Unsecured personal loan balances grow while originations
decline; delinquencies drop but remain elevated
Total unsecured loan balances grew for the 11th consecutive
quarter to a record of $245 billion in Q4 2023, representing a YoY
increase of 10.5%. Balance growth was seen across all risk tiers,
led by super prime at 35% growth YoY. Average account balance grew
YoY by 6.2% to a record $8,704, led by increases in subprime
(11.4%) and followed by super prime (7.6%). Originations fell by
10.3% YoY from record levels in 2022, and that was reflected in new
account balances, which were down 14.6% YoY in Q3 2023 to $33
billion. All risk tiers except for super prime saw YoY declines in
new account balances. Borrower-level 60+ DPD delinquency was 3.9%
in Q3 2023, down from 4.1% a year prior, reflecting an originations
mix shift to lower-risk borrowers due to lender tightening over the
past several quarters. On a vintage basis, performance for the Q4
2022 new account vintage (through November 2023) improved vs. the
Q4 2021 cohort over a similar time period but still had an elevated
60+ DPD delinquency rate at the account level compared to earlier
vintages.
Instant Analysis
“With interest rates eventually lowering over the course of
2024, there could be a gradual thaw in the unsecured personal loans
market. However, lenders and investors will be watching delinquency
rates closely, and will hope to see continued improvements in
overall and vintage performance. In the meantime, lenders will
continue to compete for lower risk consumers.”
- Liz Pagel, senior vice president of consumer
lending at TransUnion
Q4 2023 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q4 2023 |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Total Balances |
$245 billion |
$222 billion |
$167 billion |
$145 billion |
Number of Unsecured Personal Loans |
28.1 million |
27.0 million |
22.8 million |
21.2 million |
Number of Consumers with Unsecured Personal
Loans |
23.5 million |
22.5 million |
19.9 million |
19.3 million |
Borrower-Level Delinquency Rate (60+ DPD) |
3.90% |
4.14% |
3.00% |
2.70% |
Average Debt Per Borrower |
$11,773 |
$11,116 |
$9,622 |
$8,795 |
Prior Quarter Originations* |
5.0 million |
5.6 million |
5.1 million |
3.5 million |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.Click here for additional unsecured personal loan
industry metrics. Click here for a Q4 2023 unsecured personal loan
infographic.
Gen Z share of originations grows as high interest rates
continue to drive sluggish mortgage market
Q4 2023 CIIR Mortgage Loan Summary
Origination volumes continued to see YoY declines, down 22% to
1.2 million in Q3 2023. This, however, represented the smallest YoY
decline in the past seven quarters, indicating that the mortgage
origination market may be near its bottom. Purchase originations
were down 18% YoY for the quarter, while rate and term refinance
was down 27%. Cash-out refi was down 44% YoY in Q4 2023.
Generationally, the share of mortgage originations in Q4 among Gen
Z rose from 9.6% in Q3 2022 to 13.2% in Q3 2023 as more Gen Z
consumers age into traditional homebuying years, while all other
groups fell in share over the same period. In the home equity
market, the post-pandemic surge in originations has slowed but
remained above recent historic norms in Q3 2023 at 582K. This
represents the second-highest Q3 since 2008. The total was split
fairly evenly between HELOCs and HELOANs for the quarter, and both
were driven by originations from Gen X and Baby Boomer homeowners.
60+ DPD consumer-level delinquencies continued to inch higher to
1.03% in Q4 2023.
Instant Analysis
“Persistently high mortgage rates remain a significant headwind
in the mortgage market, particularly affecting demand for
refinance. Purchase originations will continue to drive the
mortgage market over the next several quarters, as demand for
refinance will depend on mortgage rates falling significantly below
current high levels. The 2022 resurgence in home equity lending
continued to recede in Q3 2023, with both HELOCs and HELOANs coming
off the 10-year highs seen the year prior.”
- Satyan Merchant, senior vice president,
automotive and mortgage business leader at TransUnion
Q4 2023 Mortgage Trends
Mortgage Lending Metric |
Q4 2023 |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Number of Mortgage Loans |
52.9 million |
52.6 million |
51.3 million |
50.8 million |
Consumer-Level Delinquency Rate (60+ DPD) |
1.03% |
0.89% |
0.75% |
0.95% |
Prior Quarter Originations* |
1.2 million |
1.5 million |
3.4 million |
3.9 million |
Average Loan Amounts of New Mortgage
Loans* |
$337,977 |
$334,339 |
$311,631 |
$296,506 |
Average Balance per Consumer |
$258,167 |
$252,212 |
$237,393 |
$222,003 |
Total Balances of All Mortgage Loans |
$12.0 trillion |
$11.7 trillion |
$10.7 trillion |
$9.9 trillion |
* Originations are viewed one quarter in arrears to account
for reporting lag.Click here for additional mortgage industry
metrics. Click here for a Q4 2023 mortgage industry
infographic.
An uptick in leasing as auto inventories begin
normalizing; delinquencies continue to climb
Q4 2023 CIIR Auto Loan Summary
Q3 2023 saw a 4% YoY decline in auto originations, down to 6.3
million. Among risk tiers, originations were up 13% YoY among super
prime, but were down among all other risk tiers YoY, and remain
down significantly when compared to pre-pandemic levels in 2019.
The new vs. used share continues to slowly trend back down toward
pre-pandemic levels, with used cars representing 58% of vehicles
financed in Q4 2023. While still well below pre-pandemic levels,
the leasing market continues its slow recovery, driven in part by
more normalized inventories. 22% of newly registered vehicles were
leased in Q4 2023, up from 17% one year prior. Average amount
financed saw YoY declines for both new and used vehicles, with new
down 3.0% YoY to $40,665 and used down 3.3% to $26,557. However,
monthly payment amounts rose 1.8% for new vehicles and 1.1% for
used vehicles. Point in time 60+ DPD consumer-level delinquency
increased to 1.61% in Q4 2023, up from 1.43% one year prior. New
vintages continue to show consistent delinquency performance when
compared to the pre-pandemic periods of 2018-2019.
Instant Analysis
“New vehicle inventory continues to see recovery from
pandemic-era lows, although some brands still face lingering
shortages. These inventory recoveries will likely be followed by
ongoing increases in consumer incentives, which should help
mitigate affordability challenges in the new vehicle segment.
Affordability remains an issue in the used vehicle market and for
below prime consumers as we continue to see higher interest rates
and the effects of inflation and used vehicle values remain
elevated. While originations remain down YoY, the growth by super
prime borrowers may be an early indicator of pent-up demand for
vehicles, and that additional inventory and incentives may drive
origination growth among additional risk tiers moving forward.”
- Satyan Merchant, senior vice president,
automotive and mortgage business leader at TransUnion
Q4 2023 Auto Loan Trends
Auto Lending Metric |
Q4 2023 |
Q4 2022 |
Q4 2021 |
Q4 2020 |
Total Auto Loan Accounts |
80.4 million |
80.2 million |
81.4 million |
82.5 million |
Prior Quarter Originations1 |
6.3 million |
6.5 million |
7.2 million |
7.2 million |
Average Monthly Payment NEW2 |
$737 |
$707 |
$630 |
$575 |
Average Monthly Payment
USED2 |
$537 |
$529 |
$476 |
$401 |
Average Balance per Consumer |
$23,945 |
$22,998 |
$21,298 |
$19,868 |
Average Amount Financed on New Auto
Loans2 |
$40,665 |
$41,941 |
$40,490 |
$36,245 |
Average Amount Financed on Used Auto
Loans2 |
$26,557 |
$27,456 |
$27,341 |
$22,426 |
Consumer-Level Delinquency Rate (60+ DPD) |
1.61% |
1.43% |
1.05% |
1.10% |
1Note: Originations are viewed one quarter in arrears to account
for reporting lag.2Data from S&P Global
MobilityAutoCreditInsight, Q4 2023 data only for months of October
& November.Click here for additional auto industry
metrics. Click here for a Q4 2023 auto infographic.
For more information about the report, please register for
the Q4 2023 Credit Industry Insight Report webinar.
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company with
over 13,000 associates operating in more than 30 countries. We make
trust possible by ensuring each person is reliably represented in
the marketplace. We do this with a Tru™ picture of each person: an
actionable view of consumers, stewarded with care. Through our
acquisitions and technology investments we have developed
innovative solutions that extend beyond our strong foundation in
core credit into areas such as marketing, fraud, risk and advanced
analytics. As a result, consumers and businesses can transact with
confidence and achieve great things. We call this Information for
Good® — and it leads to economic opportunity, great experiences and
personal empowerment for millions of people around the world.
http://www.transunion.com/business
Contact |
Dave
Blumberg |
|
TransUnion |
|
|
E-mail |
dblumberg@transunion.com |
|
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Telephone |
312-972-6646 |
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