TransUnion Analysis Uncovers Surprising Truth: Inflation-Adjusted Debt Growth Much Smaller Over the Last Five Years

Core Insights - The analysis by TransUnion reveals that while total consumer credit balances have increased nominally, inflation-adjusted figures show declines in real balances across most credit risk tiers [2][3][4]. Consumer Credit Trends - Total consumer credit balances rose from $14.1 trillion in Q1 2020 to $18.0 trillion in Q1 2025, a nominal increase of approximately 28%, while inflation-adjusted growth is only about 3% [2][3]. - Inflation-adjusted balances declined across most credit risk tiers, with the prime risk tier experiencing a 14% drop, while super prime consumers saw an 18% increase, largely due to higher mortgage balances [3][5]. Credit Card Insights - Serious delinquencies for credit cards decreased year-over-year for the second consecutive quarter, dropping to 2.43% in Q1 2025, indicating improved credit management among consumers [8][10]. - The total number of credit cards increased to 563 million in Q1 2025, with total credit card balances reaching $1.07 trillion [10]. Unsecured Personal Loans - Unsecured personal loan originations hit a new high of 6.3 million in Q4 2024, a 26% increase year-over-year, with total balances reaching $253 billion in Q1 2025 [13][16]. - The overall borrower-level delinquency rate for unsecured personal loans declined to 3.49% in Q1 2025, down from 3.75% the previous year [14][16]. Mortgage Market Dynamics - Mortgage originations increased by 30.2% year-over-year in Q4 2024, reaching 1.2 million, with the average amount of new mortgage loans rising to $366,443 [19][22]. - The consumer-level delinquency rate for mortgages ticked up to 1.36% in Q1 2025, although it remains below long-term averages [21][22]. Auto Loan Developments - Auto loan originations grew by 8% year-over-year in Q4 2024, reaching 6.2 million, with super prime borrowers leading the growth [23][26]. - The consumer-level delinquency rate for auto loans increased to 1.56% in Q1 2025, reflecting elevated delinquency levels particularly for prime and below tiers [23][26].