TransUnion Forecasts Lending Growth

- Unsecured personal loan originations are projected to see the most significant growth in 2026, with an expected increase of 5.7%. This is attributed to consumers seeking to consolidate high-interest credit card debt as interest rates begin to fall. - The forecast for auto loans indicates a slight decline in new originations by 1.5% in 2026. This follows a period of accelerated purchases in the previous year as consumers aimed to avoid the impact of import tariffs. Despite the slowdown in originations, delinquency rates for auto loans are expected to remain relatively stable. - In the mortgage sector, a return to a more normal cycle is anticipated, with purchase originations forecast to grow by 4% and refinances by 4.2%. According to Satyan Merchant, senior vice president at TransUnion, easing 30-year mortgage rates and more balanced housing inventory levels are expected to improve affordability for homebuyers and those looking to refinance. - While overall lending is expected to grow, delinquency rates are forecast to see slight increases across most credit products. Mortgage delinquencies (60+ days past due) are projected to rise to 1.65%, and auto loan delinquencies are expected to level out at 1.54%. Michele Raneri, vice president at TransUnion, notes that these increases are measured and that consumers appear to be managing their finances reasonably well in the current economic environment. - The growth in credit card balances is expected to slow to 2.3% in 2026, the smallest year-over-year increase since 2013 (excluding 2020). This moderation is a result of more disciplined underwriting by lenders and consumers exercising more restraint. - Technology, particularly Artificial Intelligence, is playing an increasingly significant role in the lending landscape of 2026. Lenders are leveraging AI for more sophisticated risk modeling, fraud detection, and to personalize loan offerings. - The economic backdrop for this forecast includes expectations of moderate GDP growth and a complex interest rate environment. While the Federal Reserve is anticipated to make some rate cuts, the cost of borrowing is likely to remain a key factor for both lenders and consumers. - Subprime borrowers are a notable segment in the rise of unsecured personal loans, with robust demand from this group contributing to a 10% surge in combined balances to a new high of $276 billion. However, in the auto sector, subprime delinquencies have reached a 32-year high, indicating significant financial stress among lower-credit buyers.