STOCK TITAN

Anticipating Future Fed Interest Rate Cuts, Consumers Continue to Use Existing Credit, Gain Access to New Lines

Rhea-AI Impact
(Neutral)
Rhea-AI Sentiment
(Neutral)
Tags

TransUnion's Q2 2024 Credit Industry Insights Report reveals that consumers continue to engage with credit products amid anticipation of future Fed interest rate cuts. Key findings include:

1. Unsecured personal loan balances grew 6% YoY, with originations up for the first time in five quarters.

2. Credit card balances increased 4.8% YoY, led by subprime growth of 12.3%.

3. Auto loan originations decreased 0.4% YoY, except for super prime, which grew 10.3%.

4. Mortgage originations saw YoY growth for the first time since 2021, up 2% in Q1 2024.

The report highlights a divergence in credit usage across risk tiers, with prime and below consumers showing higher card balances and utilization, while super prime consumers are seeing more originations in areas like credit cards and auto loans.

Il rapporto sulle informazioni del settore creditizio di TransUnion per il secondo trimestre del 2024 rivela che i consumatori continuano a interagire con i prodotti creditizi in attesa di futuri tagli dei tassi di interesse da parte della Fed. I risultati principali includono:

1. I saldi dei prestiti personali non garantiti sono aumentati del 6% rispetto all'anno precedente, con le nuove concessioni che sono aumentate per la prima volta in cinque trimestri.

2. I saldi delle carte di credito sono aumentati del 4,8% su base annua, con una crescita del segmento subprime del 12,3%.

3. Le nuove concessioni di prestiti auto sono diminuite dello 0,4% su base annua, ad eccezione del segmento super prime, che ha registrato un incremento del 10,3%.

4. Le nuove concessioni ipotecarie hanno visto una crescita su base annua per la prima volta dal 2021, aumentando del 2% nel primo trimestre del 2024.

Il rapporto evidenzia una divergenza nell'uso del credito tra i vari livelli di rischio, con i consumatori prime e subprime che mostrano saldi e utilizzi più elevati delle carte, mentre i consumatori super prime registrano più nuove concessioni in settori come carte di credito e prestiti auto.

El Informe sobre Perspectivas de la Industria Crediticia del Segundo Trimestre de 2024 de TransUnion revela que los consumidores continúan utilizando productos crediticios en anticipación de futuros recortes en las tasas de interés de la Fed. Los hallazgos clave incluyen:

1. Los saldos de préstamos personales no garantizados crecieron un 6% interanual, con un aumento en las originaciones por primera vez en cinco trimestres.

2. Los saldos de tarjetas de crédito aumentaron un 4.8% interanual, liderados por un crecimiento del subprime del 12.3%.

3. Las originaciones de préstamos para automóviles disminuyeron un 0.4% interanual, excepto en el segmento super prime, que creció un 10.3%.

4. Las originaciones hipotecarias vieron un crecimiento interanual por primera vez desde 2021, aumentando un 2% en el primer trimestre de 2024.

El informe destaca una divergencia en el uso del crédito entre los distintos niveles de riesgo, con consumidores prime y subprime mostrando saldos y utilización más altos, mientras que los consumidores super prime están viendo más originaciones en áreas como tarjetas de crédito y préstamos para automóviles.

TransUnion의 2024년 2분기 신용 산업 통찰력 보고서는 소비자들이 향후 연준의 금리 인하를 기대하며 신용 상품에 계속 참여하고 있음을 보여줍니다. 주요 발견 사항은 다음과 같습니다:

1. 보증이 없는 개인 대출 잔고가 전년 대비 6% 증가하였고, 출처는 5개 분기 만에 처음으로 증가했습니다.

2. 신용 카드 잔고가 전년 대비 4.8% 증가했으며, 이는 서브프라임이 12.3% 성장하면서 주도했습니다.

3. 자동차 대출 출처는 전년 대비 0.4% 감소했지만, 슈퍼프라임은 10.3% 증가했습니다.

4. 주택 담보 대출 출처는 2021년 이후 처음으로 전년 대비 증가하며, 2024년 1분기에 2% 상승했습니다.

보고서는 위험 수준 간의 신용 사용 차이를 강조하며, 프라임 및 서브프라임 소비자는 더 높은 카드 잔고와 활용도를 보이는 반면, 슈퍼프라임 소비자는 신용 카드 및 자동차 대출과 같은 영역에서 더 많은 출처를 보고 있습니다.

Le rapport sur les perspectives de l'industrie du crédit de TransUnion pour le deuxième trimestre de 2024 révèle que les consommateurs continuent à s'engager avec des produits de crédit en anticipation de futures baisses des taux d'intérêt de la Fed. Les principales conclusions incluent:

1. Les soldes des prêts personnels non garantis ont crû de 6 % par rapport à l'année précédente, avec des origination en hausse pour la première fois en cinq trimestres.

2. Les soldes des cartes de crédit ont augmenté de 4,8 % par rapport à l'année précédente, avec une croissance subprime de 12,3 %.

3. Les origination de prêts automobiles ont diminué de 0,4 % par rapport à l'année précédente, sauf pour le segment super prime, qui a crû de 10,3 %.

4. Les origination hypothécaires ont enregistré une croissance par rapport à l'année précédente pour la première fois depuis 2021, avec une augmentation de 2 % au premier trimestre 2024.

Le rapport souligne une divergence dans l'utilisation du crédit à travers les niveaux de risque, les consommateurs prime et subprime affichant des soldes et une utilisation plus élevés, tandis que les consommateurs super prime voient plus d'origination dans des domaines comme les cartes de crédit et les prêts automobiles.

Der Bericht über die Kreditbrancheneinblicke von TransUnion für das 2. Quartal 2024 zeigt, dass Verbraucher weiterhin mit Kreditprodukten in Erwartung zukünftiger Zinssenkungen der Fed interagieren. Wesentliche Ergebnisse umfassen:

1. Die Salden unbesicherter persönlicher Darlehen wuchsen im Jahresvergleich um 6 %, wobei die Neuungen zum ersten Mal in fünf Quartalen zunahmen.

2. Die Salden von Kreditkarten stiegen um 4,8 % im Jahresvergleich, angeführt von einem Wachstum im Subprime-Bereich von 12,3 %.

3. Die Neuvergaben von Autokrediten verringerten sich um 0,4 % im Jahresvergleich, mit Ausnahme von Super Prime, das um 10,3 % wuchs.

4. Die Neuvergaben von Hypotheken verzeichneten zum ersten Mal seit 2021 ein Wachstum im Jahresvergleich und stiegen um 2 % im 1. Quartal 2024.

Der Bericht hebt eine Divergenz in der Kreditnutzung über Risikostufen hinweg hervor, wobei Prime- und Subprime-Verbraucher höhere Kartensalden und -nutzungen aufweisen, während Super Prime-Verbraucher in Bereichen wie Kreditkarten und Autokrediten mehr Neuvergaben verzeichnen.

Positive
  • Unsecured personal loan originations grew 7% YoY in Q1 2024, led by super prime and near prime segments
  • Credit card total balances reached $1.05 trillion, marking the third consecutive quarter above one trillion
  • Mortgage originations increased 2% YoY in Q1 2024, the first YoY growth since 2021
  • Auto loan originations for super prime consumers increased 10.3% YoY in Q1 2024
  • Gen Z increased its share of mortgage originations from 12.4% to 14.9% YoY
Negative
  • Credit card borrower-level delinquencies (90+ DPD) increased by 20bps YoY to 2.26%
  • Bank card originations declined 7% YoY, marking the fourth consecutive quarter of YoY declines
  • Mortgage delinquencies (60+ DPD) increased to 1.12% in Q2 2024, up from 0.89% in Q2 2023
  • Auto loan delinquencies (60+ DPD) increased slightly YoY to 1.4%
  • Total new account balance for unsecured personal loans fell 10% YoY to $27 billion in Q1 2024

Insights

The Q2 2024 TransUnion CIIR reveals mixed signals for the credit market. While overall credit engagement remains strong, there's a clear divergence between consumer segments. Super prime borrowers are seeing increased access and originations across various credit products, while prime and below segments face more challenges.

Key observations:

  • Credit card balances grew 4.8% YoY, with subprime leading at 12.3%
  • Unsecured personal loan balances increased 6% YoY, marking the 7th consecutive quarter of growth
  • Mortgage originations saw YoY growth for the first time since 2021
  • Auto loan originations decreased slightly, except for the super prime segment

These trends suggest that while consumers are still relying on credit, lenders are becoming more selective, favoring lower-risk borrowers. The anticipated Fed rate cuts could significantly impact these trends in the coming quarters.

The credit market landscape is evolving in response to economic pressures. Notable trends include:

  • Generational shift: Gen Z's share of credit card originations increased 2% YoY, now accounting for 19% of new accounts
  • Mortgage market dynamics: Gen Z's share of mortgage originations jumped from 12.4% to 14.9% YoY
  • Auto finance trends: The new/used vehicle origination distribution is approaching pre-pandemic levels, with 40% new and 60% used in Q1 2024

These shifts indicate changing consumer behaviors and preferences across generations. The increased participation of Gen Z in credit markets suggests a growing financial engagement among younger consumers. However, the overall tightening of credit access for non-super prime borrowers could lead to increased financial stress for some segments, potentially impacting consumer spending and economic growth in the near term.

The Q2 2024 CIIR highlights evolving risk patterns in the credit market:

  • Credit card delinquencies (90+ DPD) increased 20bps YoY to 2.26%
  • Unsecured personal loan delinquencies (60+ DPD) decreased to 3.4%, with subprime seeing a 7% YoY decline
  • Mortgage delinquencies (60+ DPD) rose to 1.12% from 0.89% YoY
  • Auto loan delinquencies (60+ DPD) slightly increased YoY to 1.4%

The divergent delinquency trends across product types suggest varying levels of financial stress among different consumer segments. The improvement in personal loan delinquencies, particularly in the subprime category, is a positive sign. However, the continued rise in mortgage and auto loan delinquencies warrants close monitoring. Lenders should remain vigilant and may need to adjust their risk management strategies, especially if economic conditions deteriorate further.

Q2 2024 TransUnion Credit Industry Insights Report explores the latest credit trends

CHICAGO, Aug. 08, 2024 (GLOBE NEWSWIRE) -- Findings from the newly released Q2 2024 Quarterly Credit Industry Insights Report (CIIR) from TransUnion (NYSE: TRU) reveal that as consumers continue to await interest rate relief in the form of rate cuts, credit products continue to serve to bridge the financial gaps that may exist in many household budgets.

The report reveals that in this challenging current macroeconomic environment, consumers are continuing to engage in the credit market, taking on more balances and credit products. And while prime and below consumers are seeing lower year-over-year (YoY) new originations across many products, though not all, they continue to use their available credit to get by each month as evidenced by YoY growth in credit card balances and utilization.

“Consumers across the board continue to engage with a wide range of credit products, with continued balance growth across credit risk tiers. Lower risk super prime, in particular, originated more this quarter in areas such as credit cards and auto,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. “Of course, on the origination front, this doesn’t mean prime and below consumers don’t also have access to new credit in these areas. However, they are going to have to wait for lower interest rates and for their monthly payments to come down.”

Key findings include:

  • Unsecured personal loan balance growth continued in Q2 2024, albeit at a more moderated pace. While it was the seventh consecutive quarter of balance growth, YoY growth was only 6%, down from the double-digit growth seen at its peak. Originations saw YoY growth for the first time in five quarters in Q1 2024 (the most recent quarter for which originations data are available). Growth was led by super prime and near prime, at 12% and 10% YoY growth respectively, and all risk tiers except prime plus seeing growth.

  • Bank card balances grew 4.8% YoY led by subprime at 12.3% growth. All risk tiers saw growth YoY. Card originations were down 7% YoY in Q1 2024. However, super prime saw growth YoY.

  • It’s a similar story with auto, with originations down YoY in Q1 2024, with the exception of super prime. Among the super prime risk tier, originations were up 10.3% YoY in Q1 2024. Balances grew 2.7% YoY, primarily behind growth among the subprime (9.8%) and super prime (7.9%) risk tiers.

  • Mortgage originations saw YoY growth in Q1 2024, which represents the first YoY growth since 2021. The growth was headlined by growth on both ends of the credit risk spectrum, with subprime up 15.7% YoY and super prime up 12.1% over that time.

Raneri added, “It remains to be seen how these numbers will change if and when the Fed lowers interest rates later this year. For consumers, the best thing that they can do is ensure that their credit is in the best position possible when that time comes in hopes of being able to take advantage of those lower rates.”

To learn more about the latest consumer credit trends, register for the Q2 2024 Quarterly Credit Industry Insights Report webinar. Read on for more specific insights about credit cards, personal loans, auto loans and mortgages.

Balances and accounts rise YoY as consumers continue to turn to cards

Q2 2024 CIIR Credit Card Summary

The total number of credit cards topped 545 million in Q2 2024 as consumers continued to turn to cards to help manage in this challenging economic environment. Similarly, balances continued to grow (up 8.6% YoY) albeit at a lower rate than previously. This follows a period of consistent double-digit YoY percentage increases. Total balances remained above one trillion for the third consecutive quarter, at $1.05 trillion. Borrower-level delinquencies measured as 90 or more days past due (90+ DPD) increased by 20bps YoY to 2.26%; however, the YoY increase between 2023 and 2024 was significantly less than the 49bps YoY increase between 2022 and 2023. Bankcard originations declined 7% YoY, marking the fourth consecutive quarter of YoY declines. Generationally, 19% of all originations were attributed to Gen Z, up 2% YoY, and the only generation that saw a YoY increase in share.

Instant Analysis

“A more pronounced divergence appears to be occurring when it comes to how different consumer segments are faring in this economic environment, and in particular, how they are using their credit cards. Higher-risk prime and below segments seem to be experiencing more significant inflationary pressures and as such, relying on their cards more, evident in increasing balances and higher utilization. Originations will likely continue to decline for mid-tier and worse consumers as issuers look to less risky borrowers. We expect delinquency rates to continue to rise, though the growth rate should decelerate.”

- Paul Siegfried, senior vice president and credit card business leader at TransUnion

Q2 2024 Credit Card Trends

Credit Card Lending Metric (Bankcard)Q2 2024Q2 2023Q2 2022Q2 2021
Number of Credit Cards (Bankcards)545.1 million530.6 million500.0 million463.4 million
Borrower-Level Delinquency Rate (90+ DPD)2.26%2.06%1.57%0.95%
Total Credit Card Balances $1.05 Trillion$963 billion$820 billion$707 billion
Average Debt Per Borrower$6,329$5,947$5,270$4,828
Number of Consumers Carrying a Balance170.1 million167.2 million161.6 million152.9 million
Prior Quarter Originations*17.7 million19.0 million18.9 million14.8 million
Average New Account Credit Lines*$6,204$5,972$5,035$3,974

*Note: Originations are viewed one quarter in arrears to account for reporting lag.
Click here for a Q2 2024 credit card infographic.
For more credit card industry information, click here for episodes of Extra Credit: A Card and Banking Podcast by TransUnion.

Rise in originations helps unsecured personal loans to new record balance

Q2 2024 CIIR Unsecured Personal Loan Summary

After five consecutive quarters of YoY originations declines, unsecured personal loan originations were up 7% YoY in Q1 2024 to 4.6 million. Almost all risk tiers, except for prime plus, contributed to the growth in originations, led by super prime and near prime. Q2 2024 represented the 12th consecutive quarter of YoY growth in total balances. However, for the 7th consecutive quarter, that YoY balance growth was at a slower rate than the quarter before, with growth of 6% to $246 billion. Total new account balance for Q1 2024 fell 10% YoY to $27 billion, while the average balance per consumer saw a small growth of 1.2% YoY in Q2 2024. Total number of consumers with a balance grew YoY for the 11th consecutive quarter, reaching 23.9 million. Consumer-level 60+ DPD delinquencies fell to 3.4% in Q2 2024. This was led by subprime, which saw a decline of nearly 7% YoY in Q2 2024.

Instant Analysis

“Super prime lending largely fueled the new record in balances and contributed to the first YoY quarter of origination growth in five quarters, although total new account balances were lower in aggregate. Delinquency numbers continued to improve for the second consecutive quarter, driven by lower subprime borrower delinquencies. We are seeing FinTech activity in the unsecured personal loans market returning to levels seen in previous years. It will be worth watching to see if FinTechs, and other lenders, are positioning themselves to take advantage of likely Federal Reserve rate cuts later in 2024.”

 - Liz Pagel, senior vice president of consumer lending at TransUnion

Q2 2024 Unsecured Personal Loan Trends

Personal Loan MetricQ2 2024Q2 2023Q2 2022Q2 2021
Total Balances$246 billion$232 billion$192 billion$146 billion
Number of Unsecured Personal Loans28.8 million27.2 million24.9 million20.7 million
Number of Consumers with Unsecured Personal Loans23.9 million22.7 million21.0 million18.7 million
Borrower-Level Delinquency Rate (60+ DPD)3.38%3.62%3.37%2.28%
Average Debt Per Borrower$11,687$11,548$10,344$9,079
Average Account Balance$8,557$8,558$7,705$7,072
Prior Quarter Originations*4.6 million4.3 million5.0 million3.2 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 Q2 2024 unsecured personal loan infographic.

Mortgage originations up YoY for the first time since 2021

Q2 2024 CIIR Mortgage Loan Summary

Q1 2024 origination volumes increased by 2% YoY to 915K. This represents the first YoY increase in originations since 2021. Generationally, Gen Z saw an increase in share of mortgage originations, up from 12.4% in Q1 2023 to 14.9% in Q1 2024, the only generation to see a share increase over the period. Purchase originations fell 1% YoY, although did account for 84% of all originations in Q1 2024. Delinquencies continued to trend upward, with consumer level 60+ DPD delinquencies up to 1.12% in Q2 2024, up from 0.89% in Q2 2023. FHA loans maintained the majority share of delinquent accounts. The Q2 2023 vintage is underperforming earlier vintages at 12 months after origination. Home equity originations were down 4% YoY to 472K in Q1 2024. HELOC originations fell 7% YoY to 234K in Q1 2024, which marked the fifth consecutive quarter of YoY declines. HELOAN originations fell 1% YoY top 237K in Q1 2024.

Instant Analysis

“After reaching two decade highs in 2023, mortgage rates have moderated slightly over the first half of 2024, a likely factor in the modest originations gains referenced above. With a contracting monetary policy anticipated in the second half of 2024 due to easing inflationary pressure, mortgage rates are expected to decline further by the end of the year, which could further stimulate the mortgage market. Delinquencies continued to trend up in Q2, marking the ninth consecutive quarter of annual increases – and is a trend to continue to monitor in the coming quarters.”

- Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion

Q2 2024 Mortgage Trends

Mortgage Lending MetricQ2 2024Q2 2023Q2 2022Q2 2021
Number of Mortgage Loans53.4 million52.5 million51.8 million51.1 million
Consumer-Level Delinquency Rate (60+ DPD)1.12%0.89%0.77%0.70%
Prior Quarter Originations*915K899K2.2 million3.9 million
Average Loan Amounts
of New Mortgage Loans*
$339,232$326,214$322,631$297,534
Average Balance per Consumer$261,389 $253,838$246,091$229,534
Total Balances of All Mortgage Loans$12.2 trillion$11.7 trillion$11.2 trillion$10.3 trillion

* 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 Q2 2024 mortgage industry infographic.

Average monthly auto payments down slightly YoY while delinquencies tick up

Q2 2024 CIIR Auto Loan Summary

Originations for Q1 2024 were at 6 million, which was down 0.4% YoY. Originations were down across all risk tiers with the exception of super prime, which was up 10.3% YoY. The new/used vehicle origination distribution continues to trend toward pre-pandemic ratios, with 40% of vehicles financed new as opposed to 60% used in Q1 2024. This compares to 41% new and 59% used in pre-pandemic Q1 2019. Total auto finance balances stood at $1.6 trillion in Q2 2024, up 2.7% YoY. The average amount financed in Q2 2024 was down 3.7% for used vehicles, although the amount remained flat for new. Average monthly payments were down slightly for both new (-0.5%) and used (-1.5%) YoY, likely due in large part to vehicle price stabilization. 60+ DPD consumer-level delinquency was up slightly YoY to 1.4%. New vintages from 2023 continued to show consistent performance when compared to the pre-pandemic periods of 2018/2019 while 2023 used vintages were slightly improved compared to the 2022 cohort, but remained worse than 2018/2019 vintages.

Instant Analysis

“While originations remained down YoY, the fact that they were up significantly among super prime is a sign that increased inventories and price declines have gotten lower-risk borrowers off the sidelines and into the market. Subprime continued to see the most significant challenges, likely due to affordability concerns, with originations down 27.4% from Q1 2019 levels. Price stabilization has led to monthly payments remaining relatively flat YoY. Higher delinquencies are worth watching, and they are impacting loan availability at this time. Potential for rate declines, coupled with more normal inventory levels and reduced prices could provide relief to consumers in this market.”

- Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion

Q2 2024 Auto Loan Trends

Auto Lending MetricQ2 2024Q2 2023Q2 2022Q2 2021
Total Auto Loan Accounts80.2 million80.2 million80.4 million82.1 million
Prior Quarter Originations16.0 million6.0 million6.7 million7.3 million
Average Monthly Payment NEW2$740$743$680$597
Average Monthly Payment USED2$527$535$521$448
Average Balance per Consumer$24,199$23,501$22,178$20,548
Average Amount Financed on New Auto Loans2$41,324$41,290$41,094$36,634
Average Amount Financed on Used Auto Loans2$25,995$26,983$28,481$24,272
Consumer-Level Delinquency Rate (60+ DPD)1.4%1.3%1.1%0.7%

1Note: Originations are viewed one quarter in arrears to account for reporting lag.
2Data from S&P Global MobilityAutoCreditInsight, Q2 2024 data only for months of April & May.
Click here for a Q2 2024 auto industry infographic.

For more information about the report, please register for the Q2 2024 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

ContactDave Blumberg
 TransUnion
  
E-maildblumberg@transunion.com 
  
Telephone312-972-6646
  

FAQ

What was the total credit card balance in Q2 2024 according to TransUnion's report?

According to TransUnion's Q2 2024 report, the total credit card balance reached $1.05 trillion, marking the third consecutive quarter above one trillion dollars.

How did unsecured personal loan originations perform in Q1 2024?

Unsecured personal loan originations increased by 7% year-over-year in Q1 2024, reaching 4.6 million. This growth was primarily led by super prime and near prime risk tiers.

What was the trend in mortgage originations for TransUnion (TRU) in Q1 2024?

TransUnion (TRU) reported that mortgage originations increased by 2% year-over-year in Q1 2024, reaching 915,000. This marks the first year-over-year increase in mortgage originations since 2021.

How did auto loan originations perform across different risk tiers in Q1 2024?

In Q1 2024, auto loan originations were down 0.4% year-over-year overall. However, the super prime risk tier saw a 10.3% year-over-year increase in originations, while all other risk tiers experienced declines.

What was the trend in credit card delinquencies for TransUnion (TRU) in Q2 2024?

TransUnion (TRU) reported that credit card borrower-level delinquencies (90+ days past due) increased by 20 basis points year-over-year to 2.26% in Q2 2024.

TransUnion

NYSE:TRU

TRU Rankings

TRU Latest News

TRU Stock Data

17.00B
194.20M
0.28%
104.92%
2.72%
Financial Data & Stock Exchanges
Services-consumer Credit Reporting, Collection Agencies
Link
United States of America
CHICAGO