Patrice Onwuka, director of the IWF Center for Economic Opportunities, discusses on Fox Business Tonight that household wealth has fallen by $13.5 trillion this year.
Delinquency rates for credit cards and personal loans are expected to rise next year, with consumer credit reporting agency TransUnion predicting interest rate hikes next year and changes in consumer behavior following persistently high inflation. predicts that it will rise to the highest level.
The firm’s 2023 consumer credit forecast projects delinquencies on serious credit cards will rise over the next 12 months from 2.10% this year to 2.6%, and unsecured personal loans will delinquency rates are expected to reach 4.10% to 4.3%. TransUnion says the delinquency rate for those categories hasn’t reached this level since 2010.
Delinquencies on credit card and personal loan payments are expected to hit their highest levels in more than a decade in 2023, according to TransUnion’s latest forecast. (iStock / iStock)
Michelle Ranieri, vice president and head of U.S. research and consulting at TransUnion, said: “Severely rising interest rates and stubbornly high inflation, coupled with fears of recession, are the challenges consumers have faced in recent years. is the latest in a series of major challenges,” said Michel Ranieri. “It’s no surprise to see delinquency rates on credit cards and personal loans, two of the most popular loan products, increase significantly.”
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TransUnion said that over the past two years, aggressive loan growth and delinquency rates have approached pre-pandemic levels. But now they are waiting to change that.
US credit card debt is at an all-time high this year, and payments are expected to increase in 2023. (Jeffrey Greenberg/UCG/Universal Images Group via Getty Images/Getty Images)
Ranieri noted that the projected credit card delinquency rate for 2023 is considered high, and told FOX Business, “It’s because consumers have been given so much incentive money that they could use — I think I think they took some damage. When the time came, they used it a lot and started losing their savings … they couldn’t pay off all their credit cards like they used to.”
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TransUnion still sees demand for most lending products next year as strong compared to pre-pandemic levels, and actually expects annual growth in auto and home loans.
Ranieri said demand for new vehicles is still growing due to lack of availability during the pandemic, and TransUnion expects vehicle inventory to rebound by the end of 2023. more convenient for consumers.
Used cars for sale are displayed at a dealership in Richmond, California. Used car prices, a key component of inflationary growth in 2022, have fallen recently. (Justin Sullivan/Getty Images/Getty Images)
The expected growth of housing credit lines may be due to several factors. TransUnion expects the housing market to continue to contract in 2023 due to higher interest rates, meaning more people will stay in their homes and use their savings to fix them up rather than move. .
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More homeowners looking to pay off credit card debt are more likely to take out a HELOC to pay off high-interest loans.