Brace For ‘Record High’ Card Delinquencies, TransUnion Warns; But ‘Room for Optimism’ on Home Equity Loans

CHICAGO—Credit card issuers should brace for record-high delinquencies in 2023, a new report is warning.

TransUnion’s credit forecast is projecting credit cards and personal loan delinquencies later this year will hit levels not seen since 2010.

TransUnion said it expects credit card delinquencies to rise to 2.6% at the end of 2023, up from 2.1% at the close of 2022. Unsecured personal loan delinquency rates will increase to 4.3% from 4.1% in the same timeframe. 

‘Aggressive Loan Growth’

“Despite the forecasted growth in late credit card and personal loan payment rates, serious auto loan delinquency rates are expected to decline modestly to 1.90% in 2023 from 1.95% in 2022,” Fox Business stated in its analysis.

The uptick in delinquencies follows two years of aggressive loan growth, the report said.  

"Rapidly increasing interest rates and stubbornly high inflation combined with recession fears represent the latest in a series of significant challenges consumers have faced in recent years," said Michele Raneri, TransUnion vice president and head of U.S. research and consulting. "It's not surprising then to see pronounced increases in delinquency rates for credit card and personal loans, two of the more popular credit products." 

Other Projections

Separately, TransUnion is projecting:

• Mortgage purchase originations are expected to drop to 5.4 million in 2023, representing the lowest level in the last five years, and almost half compared to recent year totals. Moreover, refinance originations are expected to drop to “a historical low” of just over one million for 2023.
• TransUnion said there was “room for optimism” with respect to home equity loans, as they are expected to rise to 3.7 million, up by one million compared to 2022.