TransUnion predicts slow growth in consumer credit in 2022


TransUnion expects lenders to provide slightly more consumer loans in 2022 than they will provide this year.

A Chicago credit rating agency report On Wednesday, he expects lenders to grant 116.7 million loans for automobiles, credit cards and personal loans in 2022, just 0.6% more than this year.

For 2021, it expects 116 million originations in total, up 25% compared to 2020 and nearly 116.5 million originations in 2019.

The biggest gains are expected in personal loans. He expects loan originations this year to increase by 26% to 17.9 million loans, which is still lower than the 18.5 million loan originations of 2019. Next year, he expects a gain of 12%.

Subprime personal loans (Sub Prime and Near Prime) should represent 68% of the 20 million originations expected in 2022, or roughly the same share of the 17.9 million originations in 2021.

Liz Pagel, senior vice president and corporate head of consumer loans at TransUnion, said the increase is tied to an expected increase in consumer spending. Over time, it will also be strengthened as credit card balances increase and consumers turn to personal loans for debt consolidation.

“At the start of the pandemic in 2020, many personal lenders cut back on loan amounts significantly,” Pagel said. “This market was slow to recover until early 2021, as consumers had cash left after stimulus checks and lower spending.”

Auto loans are expected to be up slightly, while credit cards are expected to decline next year.

TransUnion forecasts 28.3 million auto loan originations this year, up 5.6% from 2020, but not quite the 20.4 million in 2019. Next year, it expects that. as the number increases by 2.1% to 28.9 million.

Satyan Merchant, senior vice president and auto business leader at TransUnion, said auto departures will be limited by tight inventories.

“However, consumer demand for the vehicles has not declined, and as we see increasing inventory, this will likely influence origination growth,” Merchant said.

“Lenders are also eager to return to credit and will expand into the non-premium segment of the market to meet consumer demand, especially as consumer performance has remained strong,” he said. .

At-risk borrowers account for 35% of new auto loans next year, up from 33% this year.

For credit cards, TransUnion predicts 69.8 million cards will be issued this year, up 35% from 2020 and slightly better than the 69.3 million cards issued in 2019. However, next year , it expects a decline of 2.9%.

The share of at-risk borrowers will decline slightly from 42% of new credit cards this year to 41% next year, but it will remain above the pre-pandemic share of 38% in 2019.

The Fed G-19 Consumer Credit Report shows that credit card balances for all lenders were $ 980.6 billion unadjusted in October, up 4.1% from the previous year, but still 6.6% in below February 2020. Credit unions held $ 62.3 billion in credit card balances on October 31, up 2.1% from a year earlier but down 4.6% from report to February 2020.

Paul Siegfried, senior vice president and business leader of credit cards at TransUnion, said credit card balances would increase 3% next year, but still not quite hit levels. before the pandemic.

“Balances are expected to exceed pre-pandemic levels when there is a greater return to larger card-based purchases, such as international travel and / or entertainment spending.” , said Siegfried. “International travel will particularly contribute to a significant increase in card balances.”

As more consumers apply for credit and ramp up spending, defaults are expected to hit 1.74% by year-end, while remaining at a healthy level and below bank rates. before the pandemic.


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