Credit card spending limits at their highest point since end of 2008 recession
Experian Q3 2013 data shows continued growth for consumer credit and mortgages
Costa Mesa, Calif., Jan. 24, 2014 — Experian®, the leading global information services company, today announced an analysis of bankcard trends from the Q3 2013 Experian–Oliver Wyman Market Intelligence Report that showed a 29 percent year-over-year increase in bankcard origination volumes (limits), equating to a $16 billion increase in new bankcard limits issued. The Q3 2013 bankcard origination volume of $73 billion was higher than the conclusion of the 2008 recession, as origination volume in Q4 2008 was $70 billion.
“The positive growth trend signals a return to more normalized borrowing behaviors on the part of consumers,” said Linda Haran, senior director of product management and strategy for Experian Decision Analytics. “Notably, the $16 billion year-over-year increase on new credit limits spanned across almost all VantageScore segments, highlighting a return to more confident unsecured lending by card issuers.”
“Even though overall debt levels for consumers increased 2.5 percent year over year to $10.8 trillion in Q3 2013, it is still well below 2008 levels, when consumer debt was nearly $12 trillion,” said Haran. “In addition, delinquency rates for most lending products are at or near record lows, indicating that consumers are borrowing more responsibly. In fact, delinquent bankcard charge-offs decreased 16 percent in Q3 2013 compared with last year.”
Other bankcard highlights from the Q3 2013 data include:
•The increase in bankcard originations spanned across all risk segments, highlighting a return to more confident unsecured lending
•The prime (661–780) and near-prime (601–660) VantageScore® tiers saw the biggest year-over-year bankcard limit increases
Analyzing the data for Q3 2013 shows a 12 percent increase in mortgage loan originations, growing from $508 billion to $570 billion year over year. New home loan originations grew 104 percent, perhaps indicating that increased interest rates helped to motivate would-be homebuyers. As such, new refinance loan originations decreased 22 percent year over year. Consumers with a near-prime VantageScore helped new home loan originations grow by 43 percent year over year, from $83 billion to $116 billion. Super-prime (781–850) VantageScore consumers drove the majority of new HELOC originations in Q3, accounting for 71 percent of year-over-year growth. They were followed by the prime VantageScore tier, with 19 percent.
“The housing market continued to see improvement, as mortgage originations grew despite a rise in interest rates, with the Northeast and Midwest regions leading the way with 29 percent and 17 percent year-over-year growth respectively.” said Haran. “Another sign of improvement is mortgage originations tied to actual purchases which grew 104% year-over-year with purchases representing a greater portion of the growth versus refinanced mortgage originations.”
About the data
The data for this insight and analysis was provided by Experian’s IntelliViewSM product. IntelliView data is sourced from the information that supports the Experian–Oliver Wyman Market Intelligence Reports and is easily accessed through an intuitive, online graphical user interface, which enables financial professionals to extract key findings from the data and integrate them into their business strategies. This unique data asset does this by delivering market intelligence on consumer credit behavior within specific lending categories and geographic regions.
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