Credit Access on the Incline by John Tee

According to the Q3 Industry Insights Report by TransUnion, credit access is at an all-time high. 195.9 million consumers have access to revolving credit, including bank-issued and private label credit cards, auto loans, personal loans—and of course mortgages.. This number marks the highest level of credit yet measured by TransUnion.

With greater access to credit comes a greater amount of loans, and TransUnion found that a record 142.5 million consumers had a balance on non-revolving loans, which consist of auto loans, mortgages, student loans and unsecured personal loans.

In particular, the report mentioned that the national serious mortgage borrower delinquency rate, defined as the mortgage payments that are 60 or more days past due, were down approximately 16 percent on an annual basis to 1.91 percent at the end of the third quarter (Q1).

The report also found that while delinquency rates were at their lowest point since the Great Recession, the total number of mortgages outstanding increased by almost 1 percent in the last year, marking a tally of 52.7 million. According to the report, this continues the second quarter’s (Q2) and reverses the previous trend of yearly declines that started in the fourth quarter of 2014.

TransUnion also stated that the average mortgage debt per borrower increased to $199,417, which was a growth trend that had not been previously broken since the first quarter of 2005. However, while average mortgage debt per borrower has increased, the report states that average new account balances dropped by 2.4 percent from the last year to $224,502.

According to TransUnion, this drop in new account balances can be attributed to a decline in refinance origination shares to 33 percent in 2017 from 37 percent in 2016, according to an Ellie Mae statistic cited by the report. Additionally, TransUnion states that refinance mortgages tend to hold higher balances than purchase mortgages.

“Serious mortgage delinquency rates continue to drop to new post-recession lows, indicating there may be opportunities to responsibly expand access,” said Joe Mellman, senior vice president and mortgage business leader at TransUnion.

However, Mellman noted that the drops in delinquency rates were usually preceded by periods of flat delinquencies. He also noted that drops in delinquency rates were also accompanied by higher interest rates and market saturation, both of which negatively impact the refinance market share.

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