Household debt reached an all-time high of $13.15 trillion at the end of 2017, according to Federal Reserve data. Still, a new TransUnion report showed that across numerous credit products, a healthy consumer credit market emerged for the year, along with increased access to loans, greater usage, and relatively low delinquency levels.
In TransUnion’s comprehensive Q4 2017 Industry Insights Report, the consumer credit reporting agency reviewed four credit products and various metrics during 2017 to annually gauge the consumer credit market. After conducting a year-over-year analysis, the report disclosed a healthy and robust credit market, but noted signs of lenders more actively rebalancing portfolio risk.
For the report, TransUnion looked at auto loan, credit card, mortgage, and personal loan products. It analyzed five generations to show a wide range of users along with product-specific metrics. From the analysis, trends also painted the current credit landscape for each product.
“Consumers continue to gain access to more credit, and balances are generally rising at a healthy clip,” Matt Komos, vice president of research and consulting at TransUnion, said of the findings. In particular, consumers are paying their mortgages and personal loans on time, he added, crediting the strong economy.
The analysis also found 20.3 million new accounts in 2017 across the credit products. TransUnion attributed this growth to a declining unemployment rate and growing consumer confidence. But the agency is watching for possible changes in 2018, such as increasing delinquency, higher-than-expected interest rate hikes, or other economic issues, said Komos.
Here are some loan trends from the report:
- Auto loan balances increased by 5.5 percent – its lowest annual growth rate since its 5.3 percent growth in Q2 2012
- In the fourth quarter, auto loans rose to 79.4 million as compared to 2016’s 75.8 million
- Super-prime risk consumers underwent a 1.2 percent rise in originations, while average new account credit lines dropped 3.3 percent in Q3 2017, as compared to 2016
- Total credit card balances continued increasing, up 6.6 percent in 2017, ending the year at $764 billion
- The serious mortgage delinquency rate dropped to 1.86 percent in Q4 2017 from 2.28 percent in Q4 2016. Mortgage delinquency rates have dropped annually every quarter since the recession
- Average mortgage debt for all borrowers jumped to $201,736 at year’s end, increasing more than $7,000 from 2016
Unsecured Personal Loans
- Total personal loan balances ended 2017 at $117 billion, up from 2016’s $102 billion
- Average debt per borrower increased t0 $8,083 in Q4 2017, approximately $400 greater than Q4 2016
Paying Down Debt
Amid the report’s positives, the all-time high debt levels could signal trouble. What can consumers do to pay down their debt? Experts offer the following tips:
- Accelerate debt payments by making them more often and saving interest
- Ask for a lower rate by calling the issuer
- Consistently track expenses and take a cold, hard look at them
- Cut down on expenses and put more cash away
- Create a spending plan and stick to it