Report: Growing Personal Loan Balances Fuel Consumer Credit Markets

11/7/2016 12:40 PM

Loan originations are at the highest level since the end of the Great Recession and consumers’ delinquency rates remain low.


Consumers’ personal loan balances, including for credit cards, continued to increase in the third quarter this year while delinquency rates remained low, according to TransUnion’s latest Industry Insights Report.

“The consumer credit market is performing well, as more consumers are gaining access to loans and paying them off in a timely fashion,” said Nidhi Verma, senior director of research and consulting in TransUnion’s financial services business unit in a news release.

Overall, more than 15 million consumers held a personal loan as of the third quarter this year and the number increased by 1.5 million between third quarter 2015 and 2016, TransUnion reports.

“The report also found that personal loan balances surpassed $100 billion for the first time in Q3 2016, with $17 billion of balance growth occurring in the last year,” according to the news release. “Despite surpassing $100 billion, total personal loan balances experienced the slowest third quarter growth rate since Q3 2013.”

“Personal loans crossed two key milestones in the third quarter, with consumer participation in this market at its highest level since the end of the recession,” said Jason Laky, senior vice president and automotive and consumer lending business leader for TransUnion.

Consumers’ loan balances in the third quarter this year increased 20.9 percent compared to 24.9 percent in third quarter 2015 and 25.5 percent in third quarter 2014, according to the news release.

In the credit card market, TransUnion reports that balances increased more than 7 percent from third quarter 2015 to $683 billion in the third quarter this year.

“Credit card originations, viewed one quarter in arrears (to ensure all accounts are reported and included in the data) grew by 2.3 million (15.3 percent) from 15.29 million in second quarter 2015 to 17.62 million in second quarter 2016,” according to the news release.

TransUnion notes that the serious delinquency rate, reflecting balances that are 90 days or more past due, remains low even while consumers’ credit card balances are increasing.

The third quarter 2016 rate was 1.53 percent, an increase of nine basis points from 1.44 percent in third quarter 2015. The most recent delinquency rate remains below the average third quarter amount of 1.66 percent for 2010 through 2015, according to TransUnion.

“The credit card market continues to exhibit healthy year-over-year growth in originations and balances across all risk tiers,” said Paul Siegfried, senior vice president and credit card business leader for TransUnion in the news release. “There is a higher focus on growing prime and above originations while moderating growth in the subprime segment – a trend that started at the end of 2015. This has led to continued low delinquency rates for the credit card market.”

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