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FinTechs Continue to Drive Personal Loan Growth

Though the federal government shutdown began near the end of the fourth quarter and likely had minimal impact to the Q4 2018 consumer credit metrics (loan), TransUnion is offering support to those people impacted via its website and dedicated government shutdown phone line. Federal employees affected by the shutdown who want to learn how to protect their credit can visit https://www.transunion.com/about-us/government-shut-down.

TransUnion’s Q4 2018 Industry Insights Report features insights on consumer credit trends around personal loans, auto loans, credit cards and mortgage loans. For more information, please register for the TransUnion Q4 2018 IIR Webinar.

The Number of Consumers with a Credit Card Hits Another Milestone

Q4 2018 IIR Credit Card Summary
The number of consumers with access to a credit card increased to a record 178.6 million at the close of 2018. Over the last four quarters, four million more individuals gained access to card credit. This growth was primarily driven by a 4.3% year-over-year increase in subprime borrowers, alongside a 3.1% year-over-year increase in prime plus and super prime. Subprime also led the other risk tiers in originations in Q3 2018, with a 9.6% year-over-year increase in originations. Overall, balances grew by 4.9% year-over-year, with growth occurring across all risk tiers for the 19th straight quarter. This included super prime balance growth of 6.8% year-over-year and subprime balance growth of 7.2%. Credit lines matched balance growth at 4.9% year-over-year in Q4 2018, ending a nine-quarter trend of balance growth exceeding credit line growth. The report also found that serious delinquency rates rose to 1.94%; however they remain well below recession-era levels and are near the ‘new normal’ mark.

Instant Analysis
“Balance growth was highest at opposite ends of the risk spectrum. Super prime balance growth was attributed to an increase in the number of super prime consumers with access to a credit card coupled with strong spend this past holiday season. However, the subprime segment was also a major driver of origination, balance and 90+ DPD delinquency trends this quarter.”

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

Q4 2018 Credit Card Trends

 Credit Card
Lending Metric
Q4 2018Q4 2017Q4 2016Q4 2015
 Number of Credit Cards
429.9 million418.6 million404.4 million381.2 million
 Borrower-Level
Delinquency Rate
(90+ DPD)
1.94%1.87%1.79%1.59%
Average Debt Per Borrower
$5,736$5,644$5,486$5,337
Prior Quarter Originations*
16.4 million16.3 million17.5 million15.4 million
Average New Account
Credit Lines*
$5,247$5,194$5,373$5,068

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Auto Originations on the Upswing, Though This Trend May Not Last 

Q4 2018 IIR Auto Loan Summary
After a steep decline in originations in Q3 2017, originations grew by 0.5% year-over-year in Q3 2018, with above prime consumers leading the growth. Originations are viewed one quarter in arrears to account for reporting lag. While subprime saw a slight 1.7% year-over-year increase in originations, the origination mix continues to shift toward the above prime segments, with prime plus and super prime share together increasing 0.9% year-over-year. Total balances grew at a slowed rate of 4.6% year-over-year, the lowest Q4 year-over-year increase since 2011. Delinquencies have remained stable with little to no change across most risk tiers.

Instant Analysis 
“Our financing model has given us valuable insight into the auto finance market and as such, we expect demand for new vehicle loans to continue to soften in 2019. Even as lenders continue to make credit available to subprime borrowers, we expect them to balance this demand and anticipate originations to flatten. However, steady delinquency rates continue to highlight the underlying positive health of the auto finance market despite potential headwinds such as auto tariffs and additional interest rate increases.”

  • Brian Landau, senior vice president and automotive business leader at TransUnion

Q4 2018 Auto Loan Trends

 Auto Lending Metric
Q4 2018Q4 2017Q4 2016Q4 2015
Number of Auto Loans
82 million79.4 million75.8 million71.1 million
Borrower-Level
Delinquency Rate
(60+ DPD)
1.44%1.43%1.44%1.27%
Average Debt Per Borrower
$18,858$18,597$18,391$18,004
Prior Quarter Originations*
7.1 million7.1 million7.5 million7.5 million
Average Balance 
of New Auto Loans*
$21,520$20,909$20,743$20,245

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Mortgage Market Continues to Soften Even as Delinquencies Drop

Q4 2018 IIR Mortgage Loan Summary
Serious mortgage delinquency rates have continued to remain low.  The serious delinquency rate for Q4 2018 was 1.66%, down from 1.86% at the same time last year.  In addition, 15 of the 20 largest MSAs experienced double digit year-over-year percentage declines.  Even as mortgage originations continue to remain low relative to past years, TransUnion observed a slight increase in lending activity to subprime borrowers.  Originations to subprime borrowers increased 2.1% over the same time last year, while all other risk tiers experienced an average of a 4.3% decline.  The overall origination risk mix remained largely stable with subprime originations comprising less than 4% of originations and prime and above originations comprising over 80% of total originations.  This quarter, average new mortgage account balances dropped to $227,376, from $228,563 in Q4 2017.

Instant Analysis 
“Only three MSAs, Houston, Miami, and Tampa, experienced an uptick in year-over-year delinquencies. This was expected, as the comparison point is Q4 2017, a quarter when those MSAs experienced an artificially low delinquency rate due to natural disaster forbearance programs. The decrease we’re seeing in new account balances could be due to a number of factors, the largest of which may be a change in the mix of mortgage originations from high priced MSAs to low priced MSAs. Of the top 20 MSAs, those with an average new account balance of over $270,000 had a decline of 17% in year-over-year originations, while those with an average new account balance of less than $270,000 saw only a 2% decline in year-over-year originations.”

  • Joe Mellman, senior vice president and mortgage business leader at TransUnion

  Q4 2018 Mortgage Loan Trends

 Mortgage Lending Metric
Q4 2018Q4 2017Q4 2016Q4 2015
Number of Mortgage Loans
52.8 million53.2 million52.0 million52.6 million
Borrower-Level
Delinquency Rate
(60+ DPD)
1.66%1.86%2.28%2.46%
Average Debt Per Borrower
$206,922$201,736$194,415$189,914
Prior Quarter Originations*
1.8 million1.9 million2.2 million1.9 million
Prior Quarter Average Balance 
of New Mortgage Loans*
$227,376$228,563$235,820$214,799

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

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.

Oliver Smith

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