Gen Z, those individuals born in 1995 or after, increasingly took
part in the consumer credit market during the first half of 2019.
The newly released Q2 2019 Industry Insights Report from TransUnion
(NYSE: TRU) found that growth is coming from the entire Gen Z
demographic who are 18 years or older – not just those who became
credit eligible for the first time.
Approximately 14 million Gen Z consumers (44% of this group)
were carrying a balance as of Q2 2019, up from 11 million in Q2
2018, according to the report. The number of Gen Z consumers who
were credit eligible (18 years or older) increased by 4.5 million
in the last year, rising to 31.5 million in Q2 2019. Over the next
three years, it is anticipated that another 13 million Gen Z
consumers will become credit eligible.
Gen Z Consumers Carrying a Balance Rising
at High Rates
Credit Product |
Q2 2019 |
Q2 2018 |
YOY Growth % |
Auto |
4,376,000 |
3,072,000 |
42% |
Credit Card |
7,746,000 |
5,483,000 |
41% |
Mortgage |
319,000 |
150,000 |
112% |
Personal Loan |
746,000 |
534,000 |
45% |
“Both the newest and oldest members of the credit-eligible Gen Z
generation are beginning to enter the credit market for the very
first time,” said Matt Komos, vice president of research and
consulting at TransUnion. “The rapid growth in Gen Z credit
activity is occurring despite many of these individuals having
grown up during the Great Recession. Though the recession itself
lasted less than two years, its impact was felt for several years
afterward. As we see more members of this group come of age, we
naturally expect continued growth in credit activity by Gen Z,
which we will monitor closely to compare to the behaviors of
previous generations.”
Credit cards are the most popular product among Gen Z consumers,
with 55% carrying a balance—though they still only constitute 5% of
the U.S. population carrying card debt. Mortgages had the largest
year-over-year growth rate spike with Gen Z consumers (112%), but
from a low base. Mortgages are still the credit product Gen Z
consumers are least likely to have, with only 0.5% of mortgages
held by members of this generation.
The Percentage of Gen Z Consumers
Carrying a Credit Balance is Growing (Data as of Q2
2019)
Credit Product |
Gen Z(carrying a balance) |
All Generations (carrying a
balance) |
Gen Z Percentage |
Auto |
4,376,000 |
86,064,000 |
5.1% |
Credit Card |
7,746,000 |
148,141,000 |
5.2% |
Mortgage |
319,000 |
68,368,000 |
0.5% |
Personal Loan |
746,000 |
19,556,000 |
3.8% |
“As Gen Z begins to build their financial resume, it’s important
that they develop healthy credit habits so they can shape their
financial future,” said Amy Thomann, head of consumer credit
education at TransUnion. “We encourage Gen Z, and every generation,
to seek out credit education tools that will help them take control
of their path toward better credit health.”
TransUnion’s Q2 2019 Industry Insights Report features insights
on consumer credit trends around personal loans, auto loans, credit
cards and mortgage loans. For more information on these trends,
please register for this quarter’s webinar.
Credit Card Market Continues to Show Signs of
Growth
Q2 2019 IIR Credit Card SummaryThe number of
consumers carrying a card balance peaked at 148 million, with 7.7
million belonging to Gen Z, more than any other credit product.
Total credit lines reached a high of $3.83 trillion in Q2 2019, a
10.5% increase from Q2 2018 and the fastest year-over-year rate of
growth in the post-recession era. Though double digit increases
were seen across the majority of risk tiers, it was highest in the
mid-tiers, with near prime seeing 18.2% growth year–over-year and
prime rising by 16.8%. These tiers drove total balance growth to
5.3% year-over-year in Q2 2019, the 25th straight quarter of such
growth, with average consumer balances reaching $5,645. Though the
consumer serious delinquency rate (90+ Days Past Due, or DPD) rose
to 1.71%, delinquencies remain well below the 4% mark observed
around the time of the Great Recession.
Instant Analysis“This past quarter we saw
delinquencies reach their highest level since 2010, but overall
performance in the credit card market remains at a healthy level.
Across all risk tiers, credit cards showed year-over-year
origination growth, led by prime plus with 9.4% and super prime
with 9.7%. In contrast, on the private label side we observed
continued deterioration in originations, a trend that began in
early 2017. This has been driven mostly by private label issuers
seeking quality over quantity.”
- Paul Siegfried, senior vice president and credit card
business leader at TransUnion
Q2 2019 Credit Card Trends
Credit Card Lending
Metric |
Q2 2019 |
Q2 2018 |
Q2 2017 |
Q2 2016 |
Number of Credit Cards |
437.1 million |
420.0 million |
409.8 million |
391.0 million |
Borrower-Level Delinquency Rate (90+
DPD) |
1.71% |
1.53% |
1.46% |
1.29% |
Average Debt Per Borrower |
$5,645 |
$5,543 |
$5,422 |
$5,247 |
Prior Quarter Originations* |
15.3 million |
14.5 million |
15.0 million |
15.3 million |
Average New Account Credit Lines* |
$5,773 |
$5,649 |
$5,817 |
$5,466 |
*Note: Originations are viewed one quarter in
arrears to account for reporting lag.
Delinquency Rates Hit Another Low, But Home
Affordability Impacting Overall Mortgage Market Q2
2019 IIR Mortgage Loan SummarySerious delinquency rates
for mortgage loans (60+ DPD) continued to decline, concluding the
first half of 2019 at 1.37%. While performance has stayed strong,
originations have remained conservative with 1.4 million new
mortgage loans issued in Q1 2019. This is low compared to the Q1
origination numbers over the past four years. Affordability
continues to be a challenge for consumers looking to enter the
housing market, leading to a year-over-year origination decrease of
8.2%. While most risk tiers saw negative growth, subprime was the
only risk tier to experience an increase this quarter (+0.8%). From
a generational perspective, Gen Z consumers accounted for 2% of
total originations. Gen Z may soon account for a larger share of
mortgage loan growth, however, as the median age of home buyers is
28 and the oldest individuals in this generation are currently
24.
Instant Analysis “The housing market can have
high barriers to entry for first-time home buyers, as low inventory
and rising home prices continue to make affordability an issue.
However, with interest rates dropping in Q2, we expect originations
to grow through the end of the year, largely driven by refinance
volume. Overall the market is in a healthy position, with consumer
level delinquencies reaching a historic low this past quarter.”
- Joe Mellman, senior vice president and mortgage
business leader at TransUnion
Q2 2019 Mortgage Loan Trends
Mortgage Lending
Metric |
Q2 2019 |
Q2 2018 |
Q2 2017 |
Q2 2016 |
Number of Mortgage
Loans |
53.3 million |
53.0 million |
53.0 million |
52.7 million |
Borrower-Level Delinquency Rate (60+
DPD) |
1.37% |
1.67% |
1.92% |
2.30% |
Average Debt Per Borrower |
$209,402 |
$203,887 |
$198,045 |
$192,749 |
Prior Quarter Originations* |
1.4 million |
1.5 million |
1.5 million |
1.5 million |
Prior Quarter Average Balance of New
Mortgage Loans* |
$234,696 |
$228,162 |
$219,743 |
$223,262 |
*Note: Originations are viewed one quarter in
arrears to account for reporting lag.
Auto Originations Slow, Yet Performance Remains
Strong Q2 2019 IIR Auto Loan SummaryThe
total number of auto loans rose by 1.8 million in the last year,
though year-over-year auto origination growth turned negative for
the first time in five quarters. Despite overall declines in
originations, growth occurred predominately in a straddle pattern
and was focused in the super prime (+1.0%) and subprime risk tiers
(+2.1%). Serious delinquency rates (60+ DPD) stood at 1.23% in Q2
2019, just one basis point higher than what was observed in Q2 2018
and the same level as Q2 2017. As Gen Z grows older, 1.3 million
consumers with an auto balance were added to this category in Q2
2019, a higher volume of new participants than Millennials and Gen
X combined.
Instant Analysis “Auto affordability continues
to pose a challenge for consumers, with factors such as increased
new vehicle pricing and plateauing terms contributing toward more
expensive monthly payments. The weakening demand has resulted in a
slowdown of origination growth and an overall softening in the
market. Industry forecasts indicate new vehicle sales will fall
below 17 million this year for the first time since 2014. Despite
this trend, performance remains strong with delinquencies keeping
steady year-over-year.”
- Satyan Merchant, senior vice president and automotive
business leader at TransUnion
Q2 2019 Auto Loan Trends
Auto Lending Metric |
Q2 2019 |
Q2 2018 |
Q2 2017 |
Q2 2016 |
Number of Auto Loans |
82.7 million |
80.9 million |
77.4 million |
73.3 million |
Borrower-Level Delinquency Rate (60+ DPD) |
1.23% |
1.22% |
1.23% |
1.11% |
Average Debt Per Borrower |
$18,974 |
$18,700 |
$18,486 |
$18,177 |
Prior Quarter Originations* |
6.7 million |
6.8 million |
6.7 million |
6.9 million |
Average Balance of New Auto
Loans* |
$21,418 |
$20,901 |
$20,415 |
$20,013 |
*Note: Originations are viewed one quarter in
arrears to account for reporting lag.
Personal Loan Growth Shifts to Lower Risk Borrowers,
Continues at a Slower Rate Q2 2019 IIR Personal
Loan SummarySerious personal loan delinquency rates (60+
DPD) declined to 3.12% in Q2 2019, down nine basis points from one
year earlier, partially a result of originations shifting by over
one percent to above-prime consumers. Given the higher loan sizes
these lower-risk consumers demand, this shift also drove the
average new account balance to a record high of $6,790. Total
balances grew by 18.4% year-over-year to $148.4 billion in Q2 2019,
with total balances now 54% higher than they were just three years
ago. In Q1 2019, personal loan originations grew by 8.4%
year-over-year – a much slower rate compared to the 24.5% growth
experienced over the same quarter last year. The number of
consumers with a personal loan reached 19.6 million in Q2 2019.
While Gen Z represents only 3.8% of the 19.6 million consumers with
personal loan balances, this generation is growing at the fastest
pace at 45.5% year-over-year growth.
Instant Analysis “The slower, but still
significant, personal loan growth that we have seen over the past
two quarters is a good indicator of what to expect in the market
through the end of 2019. Growth continues to favor consumers in the
lower risk tiers, which is reflected in lower delinquencies. As
this market matures and the number of new lender entrants subsides,
growth is not expected to return to levels over 25% as we saw in
recent years. However, personal loan volumes across all risk tiers
will continue to grow at a healthy level given consumer demand and
the focus on this market by both traditional and FinTech
lenders.”
- Liz Pagel, senior vice president and consumer lending
business leader at TransUnion
Q2 2019 Unsecured Personal Loan
Trends
Personal Loan Metric |
Q2 2019 |
Q2 2018 |
Q2 2017 |
Q2 2016 |
Total Balances |
$148.4 billion |
$125 billion |
$107 billion |
$96 billion |
Number of Unsecured Personal Loans |
21.6 million |
19.5 million |
17.3 million |
15.5 million |
Number of Consumers with Unsecured Personal
Loans |
19.6 million |
17.9 million |
16.1 million |
14.8 million |
Borrower-Level Delinquency Rate (60+ DPD) |
3.12% |
3.21% |
3.02% |
3.30% |
Average Debt Per Borrower |
$8,856 |
$8,198 |
$7,781 |
$7,745 |
Prior Quarter Originations* |
3.76 million |
3.5 million |
2.8 million |
3.0 million |
Average Balance of New Unsecured Personal
Loans* |
$6,790 |
$6,443 |
$6,430 |
$6,187 |
*Note: Originations are viewed one quarter in arrears to account
for reporting lag.
For more information about TransUnion’s Q2 2019 Industry
Insights Report, please register for this quarter’s webinar.
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, Europe, Latin
America and Asia. Through the power of information, TransUnion is
working to build stronger economies and families and safer
communities worldwide.
We call this Information for Good.®
http://www.transunion.com/business
Contact |
Dave Blumberg |
|
TransUnion |
E-mail |
david.blumberg@transunion.com |
Telephone |
312-972-6646 |
An infographic accompanying this announcement is available
at
https://www.globenewswire.com/NewsRoom/AttachmentNg/5111fb6a-ed1e-45f3-a64c-f71b87177c6f
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