The financial services industry continues to rebound from the early struggles of the COVID-19 pandemic, according to TransUnion’s Quarterly Credit Industry Insights Report for the second quarter of 2021.
The report, released today, shows the a mortgage, auto & personal loan and credit card industries exhibited renewed signs of strength at the midpoint of 2021.
At the start of the pandemic, many lenders struggled to make credit available to consumers in the face of branch closures and a remote workforce. One year later, lenders have adapted and shifted to a digital-first origination strategy, enhancing their capabilities to originate new accounts virtually.
Origination growth in the second quarter included mortgage originations rising 76% year over year, while auto loan originations rose 16%. The personal loan and credit card industries are also expected to show year-over-year origination growth in the coming quarter, TransUnion said.
Financial institutions cite the greatly improved view of consumer credit health since the start of the COVID-19 pandemic for the return to lending and extending of credit.
To provide greater insight on the financial standing of consumers and the health of the overall consumer credit market, TransUnion has unveiled an updated Credit Industry Indicator (CII) to better monitor consumer and lender behaviors and provide a comprehensive look at credit activity and performance.
The new CII has shown measured improvement and reflects increased lender confidence, with the indicator most recently reaching a high of 128 in the second quarter of 2021, up from 87 in the same quarter last year. This significant jump demonstrates that consumers are rebounding from the pandemic and surpasses the 127 CII observed pre-pandemic in the first quarter of 2020.
“COVID-19 upended the way consumer credit health has been looked at traditionally. To gain a more complete picture on the status of consumers, we are expanding our traditional Credit Industry Insights Report to show a comprehensive measure of credit market health,” said Matt Komos, vice president of research and consulting. “The latest CII indicates that we are well on the road to recovery, and we expect CII levels to continue to grow over the course of the year, so long as COVID cases drop, reopening plans continue, and consumer spending levels remain robust.”
The greatest impact on consumer credit health in recent years was observed during the first few months of the COVID-19 pandemic. From the first quarter of 2020 to the second quarter of 2020, the CII fell 40 points to 87 — the largest quarter-over-quarter drop in the past 10 years. Prior to this dramatic decline the CII had been on a continuous rise, reaching as high as 127 in first quarter of 2020.
For more information about the new Credit Industry Indicator (CII), please click here.
