Inflationary pressure visible across countries
Personal loan demand and debt levels are increasing due to inflationary pressures. Demand for personal loans in the US has increased by 23% in the last 12 months, compared to an overall non-mortgage debt increase of 7%. In Australia, personal loan demand grew 4% compared to Q2 2021; while Buy Now Pay Later inquiries grew a staggering 42% fueled by emerging entrants to the Australian market. And in Canada, credit card spending is reaching historically high levels with average spend per card consumer up 20% from pre-pandemic (Q2 2019) period.
Mortgage demand is changing
Rising interest rates and living costs deter new applications, except for Australia, where new mortgages rose for the first time since the pandemic to 32% of all mortgage inquiries. Home prices were steady in the US and Canada but due to rising interest rates, there is expected to be a decrease in new mortgage and refinances in the coming months.
Delinquencies are on the rise
Non-Mortgage debt has been increasing across countries globally driven by demand and inflation. In the US, personal loan debt now accounts for 3% of non-mortgage US debt, compared to 2.6% a year ago. Also in the US, auto loans originated in April 2022 show increased early delinquency after 3 months on book across subprime, near prime and prime loans. In Australia, personal loan early delinquency (30+dpd) hit the highest level since the pandemic at 3.13%