CHICAGO – A new TransUnion analysis suggests that despite recent data calling into question the possibility of interest rate cuts during 2025, new account originations across several credit products are still expected to grow this year.
The forecast and other findings were released as part of TransUnion’s newly issued Q4 2024 Quarterly Credit Industry Insights Report (CIIR).
“Following multiple years of depressed origination growth, largely driven by stubbornly high inflation, rising interest rates and elevated home and vehicle prices, new auto, mortgage, and unsecured personal loans are expected to see gains in 2025,” the company said in releasing the report.
TransUnion added that a “myriad of factors, not the least of which is lenders’ continued caution in their underwriting strategies,” will likely temper the overall rate of growth across these products.
“The Federal Reserve has signaled that it will not rush into interest rate cuts, potentially keeping rates at a level that could give consumers pause,” Jason Laky, executive vice president and head of financial services at TransUnion, said in a statement. “However, we still believe that many consumer credit products will have higher originations in 2025. This will range from modest growth in auto and unsecured personal loans to more significant increases in mortgage.”
Changes in originations are also impacted by trends within these lending products. Among the loan products examined in the new TransUnion report are:
Auto Lending
“However, forecasted growth may be tempered as industry and consumers navigate potential policy shifts introduced by the new administration,” TransUnion said. “In addition, relatively high interest rates, inflation remaining above 2%, and a still recovering used vehicle supply may also mitigate auto originations growth.”
Mortgage Lending
According to TransUnion, mortgage originations are forecast to increase from approximately 4.6 million in 2024 to approximately 5.7 million in 2025, with most of those being purchase originations (3.8 million).
Unsecured Personal Loans
Unsecured personal loan lenders are expected to continue expanding lending to riskier tiers in 2025 as the macro economy continues to moderate, TransUnion said, noting originations are expected to increase to approximately 20.8 million over the year.
Stabilization Ahead?
TransUnion said its Q4 2024 Credit Industry Insights Report sees continued signs of stabilization across consumer credit products.
“A number of the signs of a more stable consumer credit environment that emerged in Q3 2024 have continued over the past quarter across the credit spectrum,” TransUnion stated. “Originations saw some measure of YoY growth in the most recent quarter for which data are available for auto, mortgage, and unsecured personal loans. In credit cards, originations saw a smaller YoY decline than in recent quarters.”
The company further noted that delinquencies ticked down across some credit products, although others saw increases. Balances saw increases that were more in line with rates seen prior to 2020 than in the years since.
A Return to Typical Patterns
“In Q4 2024, we saw several signals inching towards a return to more typical patterns within the consumer credit market,” Michele Raneri, vice president and head of research at TransUnion, said in a statement. “Originations ticked up across mortgage and auto and saw more significant growth in unsecured personal loans. In contrast, delinquencies presented more of a mixed bag, seeing increases in auto and mortgage, while at the same time decreasing for unsecured personal loans and credit cards. We will be looking for additional signs of improved performance in these markets moving forward.”
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