Global Credit Trends

Explore global credit and financial data insights. Delivering trends in credit risk, debt, utilization and delinquencies from around the world.

 

Executive Summary

 

Here are the top 3 trends across the globe from the first half of 2023:

Sustained Mortgage Pressures

Consumers taking action to reduce their short-term mortgage burden

In the UK, significant growth in the proportion of mortgage originations with loan terms of 30+ years is evidence of consumers looking to spread the cost of mortgage payments. Over the course of the last year the proportion of mortgage originations with loan terms over 35 years has more than doubled, increasing from 3.4% to 7.7%. However, lenders are likely less willing to delay mortgage maturity in cases where a consumer’s loan term already extends into retirement age. Right now, 41% of UK mortgages are held by consumers who will already be beyond the UK retirement age at loan maturity.

In the UK, mortgage originations for loan terms over 35 years increased to 7.7% YoY as compared to 3.4% in Q2 2022

Spending Pull Back

Growth in consumer spending is finally starting to slow

In Canada, the rise in post pandemic spending has slowed. Average credit card spend per credit card consumer went up by 22.7% YoY in Q2 2022 but Q2 2023 saw a much smaller increase of 3.7%. The restraint in credit card spend was more prominent for mortgage holders and higher income segments. Those who can scale back on spending to offset credit payment obligations are doing so while lower income households are struggling to keep spending down amidst rising costs.
Average credit card spend per Canadian credit card consumer only increased 3.7% in Q2 as compared to 22.7% in Q2’22

Student Loan Impact

Repayments expected to affect younger consumers more

Student loan debt affects almost 40M consumers in the US and resuming payments will put stress on personal budgets, averaging a 17% increase in monthly debt commitment - 24% in the case of Generation Z consumers. US consumers between the ages of 18-39 hold 55% of the $1.5 trillion student loan debt, with the average loan being $38,000 per consumer.

As of October 1, 2023, Equifax anticipates federal student loan servicers to begin reporting updated balances for consumers. Insights about student loan repayments and the impact will be provided in the Full Year 2023 Global Credit Trends Report (to be published in Q1 2024).

Glossary of Common Terms & Sources

US consumers between the ages of 18-39 hold 55% of the $1.5 trillion in US student loan debt

Overall Debt

Non-mortgage debt continues to increase across most countries globally driven by demand and inflation.

Chart data is indexed as of Q4 2019.
*Data not reported for this region

   Mortgage Debt

  United States: Total mortgage debt continued to rise, but at a slower rate as new originations slow down. Mortgage debt increased by 5% YoY

  Canada: Mortgage debt rising again with higher new originations along with high average loan amount on new mortgages

  Australia: Mortgage portfolio growth slows to 4% as originations continued to drop. Q2 2023 fell 18% compared to Q2 2022. Growth in average limit per loan slowed compared to last year and below inflation levels at 2.7% higher than last year

  Non-Mortgage Debt

  United States: Non-mortgage debt has increased by ~9% from Q2 2022. Auto Lease debt and HELOC debt decreased, while Auto Loan debt increased by 23%

  Canada: Non-mortgage debt continues to rise with credit cards being the biggest driver

  United Kingdom: Consumers paying off credit card debt throughout the pandemic with balances still below 80% of January 2020 levels

  Spain: There is a slight change in the trend of the debt due to worsening of the risk profile in credit portfolios as a consequence of the macro-economic environment (Spain only reports defaulted assets)

  Argentina: Non-mortgage debt remains stable after the decrease in Q4 2022, mainly caused by bonuses and salary adjustments and by a drop in consumption due to loss of purchasing power due to high inflation

  Ecuador: Non-mortgage debt presents an increase in the second quarter caused by an effect of accelerating economic decisions prior to anticipated elections and a higher economic uncertainty in the future plus liquidity restrictions ahead

 

Debt: Money borrowed by consumers at a point in time. Refers to amortized limit or outstanding balance depending on data collected from each region, except Spain which reports just defaulted assets because the Spanish Bureau manages negative data only.

Non-Mortgage: Includes Buy Now Pay Later, credit cards, installment loans, personal loans and automobile loans. Availability and coverage will vary by region.

Demand

Growth in card and personal loan demand across multiple regions.

Chart data is indexed as of Q4 2019.
*Data not reported for this region

  Mortgage Inquiries

 Canada: Mortgage market showing resilience as demand is up from the lows of Q1 2023

 Australia & New Zealand: Mortgage refinance continued to be active as consumers look for better rates with a modest fall of 2.8% compared to Q1. Overall unsecured demand fell 8.3% in AU, first negative growth quarter since 2021 as inflation cooled. Card demand grew moderately at 5.9% compared to last year. BNPL demand fell significantly, -26% as providers focused on quality of portfolio

  Non-Mortgage Inquiries

  Canada: Credit demand remained high partly due to increasing need for credit from existing consumers as well as high immigration

  United Kingdom & Spain: Credit demand has now reached pre-pandemic levels in the UK compared to 2019, although it is not in the same situation in Spain (~90%)

 UK annual growth rate for all lending at 7.3% in July (11.7% for credit cards)

 Spain shows a slight increase in 1H 2023 credit demand from previous year

  Australia & New Zealand: Credit card demand in NZ remained strong for Q2 2023 with average weekly volume up 7% against 2022 levels. Mortgage demand stabilizing this quarter at -1.7% compared to 2022 as average property prices continued to decline

  Argentina: Non-mortgage inquiries have remained stable at strong historical levels in a context of economic and political uncertainty due to upcoming elections

  Ecuador: Non-mortgage inquiries are stable at pre-pandemic levels despite economic uncertainty

 

Non-Mortgage: Includes Buy Now Pay Later, credit cards, installment loans, personal loans and automobile loans. Availability and coverage will vary by region.

Utilization

Continued moderate increases in card utilization across regions.

90+ Delinquency (#) - Credit Card Chart data is indexed as of Q4 2019.
*Data not reported for this region

  Rising Card Delinquencies

  Overall: Multiple regions are showing an uptick in credit card delinquency

  Canada: Vintage view of credit card delinquencies shows a much higher increase in newly opened cards after 6 months of opening (especially in the sub-prime segments)

  United States: While the unit delinquency rate has surpassed pre-pandemic levels, the dollar delinquency rate lags behind; and is still below pre-pandemic levels. While subprime has the most marked increase, prime loans have reached pre-pandemic default levels as well

  Revolving debt

 Argentina: The second quarter presents stable levels of credit card utilization. In the context of high inflation and rising interest rates, credit cards have become the most common financial instrument

 Ecuador: Credit card utilization remains stable and new accounts present a 10% increase as a result of supply restrictions on microcredit loans

 Canada: Credit card utilization is increasing but the overall impact on utilization is being masked due to increasing growth in new credit card volume and higher credit limits being assigned to new cards

 United States: Credit card debt has increased significantly over the past year due to new originations and increased credit limits. However, utilization remains below pre-pandemic levels

Delinquencies

Delinquency rates continue to rise, with some regions close to pre-pandemic levels.

Chart data is indexed as of Q4 2019.
*Data not reported for this region

  United States

  Non-mortgage delinquency (removing student loans) have reached pre-pandemic levels, while mortgage delinquency remains much lower, despite an uptick in Q1 2023

  Consumer loans, auto and credit card delinquency are exceeding pre-pandemic delinquency levels, with bankcard and personal loans showing signs of increased early delinquency levels in recent vintages


  Canada

  Delinquencies are near 2019 levels for auto and credit cards

  Non-mortgage trade delinquencies up by 28.9% for non-mortgage consumers and up 37.6 for mortgage consumers compared to 12 months ago


  United Kingdom

  Mortgage delinquency rates still at low levels with households still transitioning from pre-interest rate rise fixed agreements

  Unsecured delinquency rates are starting to rise uniformly, with most product types approaching pre-pandemic levels of delinquency

  Argentina and Ecuador

  Argentina:  Delinquency remains stable. This market behavior shows the same trend since 2021, according to historical loan delinquency levels

  Ecuador:  Personal Loans delinquency is starting to rise due to liquidity problems and uncertainty affecting sales and payment capacity

 

  Australia and New Zealand

  Australia:  Signs of mortgage stress coming through, particularly with early delinquencies. 30-89 day delinquency rates increased from 0.28% in Q2 2022 to 0.40% in Q2 2023

  New Zealand:  Mortgage delinquencies increasing across all day past due categories in the 1H of 2023. 90+ day delinquencies have increased from 0.18% last year to 0.25% in Q2 2023

 

Delinquency: The delinquency rate refers to the percentage of loans that are 90 or more days past due.
Learn more about Global Credit Trends
Download The Full Report

Go Deeper

Get in Touch With An Expert

Connect with our sales team today to get a product consultation.