Credit Card and FIRST Mortgage Delinquency
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.2023
© Callahan & Associates | CreditUnions.com
- Credit card delinquency surged to 1.47% as of March 31, 2023. That’s up almost 60 basis points from two years ago. Meanwhile, first mortgage delinquencies fell to 0.29%, highlighting a strong disparity in by-product delinquency trends for credit unions in the post-Covid environment.
- During the Great Recession, credit card and first mortgage delinquency rates spiked in tandem, reflecting the troubling economic situation caused by consumers’ overreliance on credit during the housing market collapse. Indeed, it’s common for loan product delinquency rates to move in parallel because they are usually affected by similar macroeconomic factors. Why are things different today?
- Credit card delinquency levels improved throughout the pandemic as borrowers paid down debt with COVID-19 relief funds and embraced frugal spending habits. However, rising inflation and multiple interest rate hikes have dramatically pinched consumer budgets. When forced to decide which bills to pay, consumers often forgo credit cards, which are not tied to physical collateral.
- Conversely, mortgages are tied to homes, which consumers usually want to keep. The interest rate environment of the past few years makes this especially true. Many homeowners are locked into low-interest loans, and the prospect of looking for a new abode when interest rates are high is unattractive. Americans understand the value of low-interest home loans and are doing everything they can to make their payments on time, even if it means missing other loan obligations. Thus, mortgage delinquencies remain low even as consumer loan delinquencies rise.
Are Your Members Under Pressure? Gauge Delinquency In Your Market.
Learn how your institution’s lending performance stacks up against peers and the industry. Callahan’s Peer Benchmarking Suite makes it easy for credit union leaders in any role to measure performance, identify new opportunities, and support strategic plans.
