Consumers continue to turn to credit to ease financial pressures from high inflation and rising interest rates, according to the recently released report. Fourth Quarter 2022 Lending Industry Outlook Report by TransUnion. Credit card balances continued to grow, reaching record levels by the end of 2022. Bank card originations increased from 20.1 million in the third quarter of 2021 to 21.6 million in the third quarter of 2022, the originations data latest available. Gen Z consumers, in particular, increasingly turned to bank cards, showing year-over-year growth in both balances (up 64% in Q4) and originations (up 188% in Q3 ).
TransUnion said a “somewhat worrying” development was an upward trend in credit card delinquencies, both on bank cards and private label cards. However, he noted that bank card delinquencies in the fourth quarter were still hovering around pre-pandemic levels seen in 2019, while private-label card delinquencies remained below pre-pandemic levels.
Higher interest rates dampened new and refinancing mortgage originations in the third quarter. Still, homeowners eagerly continued to tap into their record reserves of home equity to help consolidate their high-interest debt, according to TransUnion. HELOCs and home equity loans continued to be a popular option. Consumers also continued to seek unsecured personal loans as a way to pay off high-interest debt, and despite rising delinquency rates among borrowers, lenders remained eager to lend, albeit with adjustments to their lending criteria that included a gradual change. borrowers
