TransUnion: US Credit-Card Loan Delinquencies to Rise in 2023

BNN Bloomberg | Paige Smith | Dec 14, 2022

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US credit-card and personal-loan delinquencies are likely to rise in 2023 to the highest in a dozen years, with lenders cutting back on originations as a potential recession looms.

  • Forecast released Wednesday by credit-reporting firm TransUnion:
    • Serious card delinquencies are expected to climb to 2.6% at the end of next year from 2.1% at the close of 2022.
    • Delinquency rates for unsecured personal loans are also expected to gain, to 4.3% from 4.1%.
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  • Credit-card originations are expected to slump 7.6% next year while still remaining higher than last year’s total. The projected dropoff would follow two years of aggressive loan growth, especially for credit cards and personal loans, and serious-delinquency rates close to pre-pandemic levels.
  • Outside of credit cards and personal loans, another area of lending is seeing a dropoff in originations: mortgages. The Federal Reserve has been boosting interest rates in an attempt to damp inflation, increases that have made their way into home-loan costs. The average rate for a 30-year, fixed loan surged past 7% this year — the first time it’s broken that level in two decades.
  • Opportunity for lenders is in auto-loan originations, TransUnion said, with an expected growth of 6% across all borrower risk tiers in the fourth quarter of next year.

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