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Healthy Consumer Credit Market Drives Return to Lending

Q2 2021 TransUnion Industry Insights Report explores credit trends

The financial services industry is rebounding strongly from the early impacts of the COVID-19 pandemic, according to TransUnion’s (NYSE: TRU) Q2 2021 Quarterly Credit Industry Insights Report (CIIR). The auto, credit card, mortgage and personal loan industries exhibited renewed signs of strength at the mid-point of 2021.

In the initial months of the pandemic, many lenders struggled with making credit available to consumers in the face of branch closures and a remote workforce. One year later, lenders have adapted and shifted to a digital-first origination strategy and enhanced their capabilities to originate new accounts virtually. Signs of this origination growth were observed in Q2 2021*, with originations increasing 76% YoY in the mortgage industry and 16% in the auto industry. The personal loan and credit card industries are expected to show YoY origination growth in the coming quarter.

Financial institutions are returning to lending and extending credit due to the greatly improved view of consumer credit health since the start of the COVID-19 pandemic. To provide greater insight on the financial standing of consumers and the health of the overall consumer credit market, TransUnion unveiled the Credit Industry Indicator (CII) to better monitor consumer and lender behaviors and provide a comprehensive look at credit activity and performance.

The new CII has shown measured improvement and is reflecting increased lender confidence, with the indicator most recently reaching a high of 128 in Q2 2021, up from 87 in Q2 2020. This significant jump demonstrates that consumers are rebounding from the pandemic and surpasses the 127 CII observed pre-pandemic in Q1 2020.

“COVID-19 upended the way consumer credit health has been looked at traditionally. To gain a more complete picture on the status of consumers, we are expanding our traditional Credit Industry Insights Report to show a comprehensive measure of credit market health,” said Matt Komos, vice president of research and consulting. “The latest CII indicates that we are well on the road to recovery, and we expect CII levels to continue to grow over the course of the year, so long as COVID cases drop, reopening plans continue, and consumer spending levels remain robust.”

CII rising following COVID-19 slowdown

The CII offers a comprehensive view of consumer credit health and provides new insights on credit activity and financial performance for consumers in the United States. The indicator accomplishes this by aggregating consumer credit data to show the pronounced impact of economic and market events on consumer credit health. Data elements are summarized on a quarterly basis to analyze changes in credit health and are categorized under four pillars: demand, supply, consumer behavior and performance. These are combined into a single, comprehensive measure that reflects the current state of consumer credit health.

As could be expected, the greatest impact on consumer credit health in recent years was observed during the first few months of the COVID-19 pandemic. From Q1 2020 to Q2 2020 the CII fell 40 points to 87, the largest quarter-over-quarter drop in the past 10 years. Prior to this dramatic decline the CII had been on a continuous rise, reaching as high as 127 in Q1 2020. The CII’s all-time low of 66 occurred in Q2 2011 as the nation was still struggling in the aftermath of the Great Recession.

CII Levels Through the Past Decade

The decline at the midpoint of 2020 occurred during the initial months of the pandemic lockdown period, a time when both demand and supply of credit had dropped due to shuttered businesses, a spike in unemployment and tightened spending. Recovery first began in Q3 2020 with the CII indicator increasing 21 points – likely driven by factors such as a low interest rate environment which increased borrowing, as well as consumers emerging from the initial lockdowns and ramping up spending in the summer months of 2020.

Contributing to the rebound in the CII were low delinquency rates and improving consumer credit behavior, which were aided in part by lender accommodation programs and enhanced income from government support programs. Also helping the rebound in the CII since Q2 2020 was the recovery in credit supply (new credit accounts originated by lenders), as well as the continued paydown of balances and larger shift of balances being held by prime and above consumers.

For more information about the new Credit Industry Indicator (CII), please click here. For more information about the report, please register for the Q2 2021 Quarterly Credit Industry Insights Report Webinar. Additional resources for consumers looking to protect their credit during the COVID-19 pandemic can be found at Read on for more specific insights about auto loans, credit cards, mortgages and personal loans.

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

Auto Industry Shows Major Signs of Recovery

Q2 2021 IIR Auto Loan Summary

The automotive finance industry rebounded in Q2 2021 and showed signs of recovery across three important metrics – originations, balances and delinquencies. Overall consumer credit performance improved to a delinquency rate of 1.23% (borrowers 60+ DPD), a rate that is on par with what had been observed pre-pandemic. The subprime risk tier has seen 5.9% origination growth with serious delinquency rates for this risk tier slowing YoY for the first time since the beginning of the pandemic. Originations continue to grow and were up 16.3% YoY with growth observed across all credit tiers – even in light of rising new vehicle prices.

Instant Analysis

“Q2 2020 was the first quarter in which the auto finance industry was truly impacted by the economic shutdown brought on by the COVID-19 pandemic. One year later, the auto finance industry is recovering nicely and showing significant growth, with the number of auto loan originations increasing to 7.4 million – compared to 6.3 million over the same period last year. This rapid increase in auto loans has occurred even as vehicle prices have been driven higher due to supply shortages impacting inventory on dealer lots. Lenders have continued to manage the risk in their portfolios well in 2021, helped by continued consumer resiliency as the economy rebounds.”

  • Satyan Merchant, senior vice president and automotive business leader at TransUnion

Q2 2021 Auto Loan Trends

Auto Lending Metric

Q2 2021

Q2 2020

Q2 2019

Q2 2018

Number of Auto Loans

83.2 million

83.5 million

82.7 million

80.9 million

 Borrower-Level Delinquency Rate (60+ DPD)





Average Debt Per Borrower





Prior Quarter Originations*

7.4 million

6.3 million

6.7 million

6.8 million

Overall Origination Growth Rate (YoY)





Subprime** Origination Growth Rate (YoY)





Average Balance

of New Auto Loans*





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

**VantageScore 3.0 standard risk tiers: Subprime= 300-600; Near Prime= 601-660; Prime= 661-720; Prime Plus= 721-780; Super Prime= 781-850

Lender and Consumer Confidence Drive Rebound in Credit Card Industry

Q2 2021 IIR Credit Card Summary

Consumers with access to credit cards reached another all-time high at 192 million in Q2 2021, a 2.8% increase from the same period last year. Originations continue to rebound. After experiencing YoY declines of -17.7% in Q4 2020 and -34.1% in Q3 2020, the gap narrowed to a decline of -3.3% in Q1 2021. In another sign that the supply and demand for credit is normalizing, significant growth was observed from the subprime risk tier, which jumped 22.7% YoY. Total balances decreased 4.1% YoY while the super prime risk tier grew 8.9% YoY showing a leading indicator that super prime consumer confidence is driving an increase in spending and the associated balance growth. Consumer performance remains strong with serious delinquency rates at a historical low, falling to 0.95% of borrowers 90+DPD in Q2 2021.

Instant Analysis

“Confidence in the economy is growing as consumer spending continues to ramp up and key credit card metrics move at or above 2019 pre-pandemic levels as a sign of recovery. To meet consumer demand, issuer supply has broadly returned to market, with uncertainty being managed through lower credit line assignments. While consumer credit card defaults are at historical lows, card issuers continue to be prudent with the risk mix of consumers with access to credit and have followed a trend of shifting credit line growth toward lower risk consumers.”

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

Q2 2021 Credit Card Trends

Credit Card Lending Metric

Q2 2021

Q2 2020

Q2 2019

Q2 2018

Number of Credit Cards

464.9 million

453.6 million

439.2 million

422.2 million

 Borrower-Level Delinquency Rate (90+ DPD)





Average Debt Per Borrower





Prior Quarter Originations*

15 million

15.5 million

15.3 million

14.5 million

Average New Account Credit Lines*





Total Balances ($B)

$707 billion

$737 billion

$796 billion

$755 billion

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

New Home Purchases and Refinancing Drive Mortgage Industry Growth

Q2 2021 IIR Mortgage Loan Summary

Mortgage origination volumes remain strong and showed a significant 78% YoY increase compared to the same time last year. Among the origination loan types, GSE loans doubled (110%) YoY, while Jumbo and FHA loan types grew at a much slower pace – 28% and 22% YoY, respectively. While refinances have declined from record levels, they accounted for the bulk of origination volume in Q1 2021 with 60% of total originations. Rising home prices have pushed the average balance of new mortgage loans to a record $298,115 in Q2 2021, driving total balances to $10.3 trillion in Q2 2021, another record. Account performance, however, remains steady as mortgage account delinquencies declined to 0.60% 90+DPD in Q2 2021 and are 29% lower than the same period last year (0.84% 90+DPD).

Instant Analysis

“The low interest rate environment has continued to spur an influx of mortgage origination activity across the board. Compared to last year, however, refinancing is once again outpacing purchase volume as consumers take advantage of historically low rates for Rate and Term and Cash Out refinancing. While new home purchase activity is still robust, rising home prices are potentially pricing some borrowers out of the housing market. These rising home values have driven mortgage balances to record highs. We expect origination volumes to remain healthy.”

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

Q2 2021 Mortgage Trends

Mortgage Lending Metric

Q2 2021

Q2 2020

Q2 2019

Q2 2018

Number of Mortgage Loans

51.2 million

50.7 million

49.9 million

49.7 million

Account-Level Delinquency Rate (90+ DPD)*





Prior Quarter Total Originations**

3.9 million

2.2 million

1.2 million

1.3 million

Prior Quarter GSE Originations**

2.2 million

1.0 million

0.5 million

0.6 million

Prior Quarter Refinance Origination Share**





Average Balance

of New Mortgage Loans**





* Delinquency rates are based on data reported to TransUnion.

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

Consumer Performance Remains Strong in Consumer Lending Industry

Q2 2021 IIR Personal Loan Summary

The unsecured consumer lending industry continues to show signs of recovery. In Q2 2021, balances increased QoQ for the first time since the pandemic began (by 1.7%), while consumer-level delinquencies fell – improving to 2.28% 60+DPD (26% lower than Q2 2020). Delinquency rates remain well below historical trends and stand at their lowest level since 2015. Average new account balances grew 7.5% YoY – driven by growth across all risk tiers. These positive trends signify health in the personal loan market, with many lenders looking to ramp up originations to meet renewed consumer demand after the industry saw a drop in the number of consumers with a personal loan since the start of the pandemic.

Instant Analysis

“The market is showing signs of recovery with lenders taking a measured return to their lending approach. While Q1 originations are still trailing Q1 2020 levels, lenders are gradually extending more credit, with the difference from pre-COVID narrowing each quarter. Increased spending is expected to continue and to ramp up throughout the year as more consumers look to access credit. Given this trajectory, originations should begin to show growth, especially as loan performance remains strong.”

  • Liz Pagel, senior vice president and consumer lending business leader at TransUnion

Q2 2021 Unsecured Personal Loan Trends

Personal Loan Metric

Q2 2021

Q2 2020

Q2 2019

Q2 2018

Total Balances

$146 billion

$153 billion

$145 billion

$123 billion

Number of Unsecured Personal Loans

20.7 million

22.2 million

21.6 million

19.5 million

Number of Consumers with Unsecured Personal Loans

18.7 million

20 million

19.6 million

17.9 million

 Borrower-Level Delinquency Rate (60+ DPD)





Average Debt Per Borrower





Prior Quarter Originations*

3.2 million

3.9 million

3.8 million

3.5 million

Average Balance of New Unsecured Personal Loans*





Average New Account Balance Growth Rate (YoY)





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

For more information about the report, please register for the TransUnion Q2 2021 CIIR Webinar. 

About TransUnion (NYSE: TRU)

TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.®

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