Banks Tighten Lending As Consumer Credit Delinquencies Rise To Pre-Pandemic Levels, According To VantageScore

Core Insights - Consumer delinquencies are nearing pre-pandemic levels, leading banks to reduce lending activity [1][5][6] - Despite a rising stock market and a 3.8% year-over-year GDP growth in Q2, there are signs of consumer weakness [2] Lending Activity - Banks are adopting a more cautious lending approach after a strong summer, resulting in a softening of originations across most credit products [1] - Consumer credit activity has slightly decreased month-over-month, with new credit account openings aligning with pre-pandemic levels [3] Mortgage Trends - The percentage of consumers with newly opened mortgages has dropped to 0.30% in September from 0.60% pre-pandemic, indicating a significant decline in mortgage activity [4] - Mortgage delinquencies have increased, with overall credit delinquencies rising from 1.02% in August to 1.13% in September, approaching pre-pandemic levels [5][6] Delinquency Details - The most significant delinquency growth is observed in older accounts that are 90-119 days past due on mortgage payments, marking the largest year-over-year increase among all credit products [7] - Elevated living costs and interest rates are contributing to higher delinquency rates, prompting lenders to be more protective of their capital [6][7]