Global Credit Trends

Executive Summary

Here are 3 top trends across the globe in 2023:

Hardship assistance helps consumers get back on track

In Australia, providers and governing bodies are actively collaborating to reduce the number of closed accounts, currently making up around 10% of accounts that enter hardship assistance programs. After declaring financial hardship, 70% of Australian credit card consumers maintain or improve their status, vs. 56% for mortgages and 52% for personal loans. Plus, the consumers with improved outcomes come off hardship assistance 50% faster.

Credit card delinquencies are on the rise

In the U.S., while recent economic indicators is reason for cautious optimism, a K-shaped recovery means that certain pockets of consumers will continue to face increasing financial stress. The number of consumers with at least one 30+DPD (days past due) delinquency increased from 4.4% in 2019 to 5.1% in 2023. In addition, credit card balances have increased 24% since 2019 while credit limits have increased by 26%. Credit limits and balances associated with 30+DPD increased by 41% and 46% respectively during this same timeframe.

Mortgage holders are feeling financial pressure from high interest rates

Upcoming mortgage renewals will be pivotal for many homeowners in Canada — consumers who locked in historically low interest rates, particularly those with substantial loan amounts, may face challenges in sustaining their payments. Mortgage delinquency rates over the last 12 months went up from 0.09% to 0.14%, a 52.3% increase with some regions surpassing pre-pandemic levels. Financially stressed mortgage holders have already started missing payments on credit cards and are now at a higher risk of insolvency.

Glossary of Common Terms & Sources

Overall Debt

Non-mortgage debt continues to increase across most countries globally driven by demand and inflation.

Chart data is indexed as of Q4 2019.
*Data not reported for this region

Mortgage Debt

United States: Mortgage originations are down 20% while average loan amounts are staying steady YoY. Overall mortgage debt has increased by 3.7% YoY

Canada: Slowest increase in mortgage debt as new originations continue to decline

Australia: Mortgage originations 9% below last year. National average limit per new account increased 8% YoY

Brazil: Mortgage debts increased 2% YoY. Non-mortgage debts increased 3% YoY

Non-Mortgage Debt

United States: Non-mortgage debt increased by ~9% YoY, driven by increases in credit card debt (15%) and Auto debt (7%). Credit card originations limits are on the rise and are currently 9% higher than the same time a year ago

Canada: Non-mortgage debt continues to rise with credit cards being the biggest driver. Card spend is slowing but reduced payments are driving balances up

United Kingdom: Gradual long term increasing trend in credit card balances, likely driven by increased costs. Total credit card balances up 9.6% YoY

Spain: Gradual decrease in mortgage debt and stabilization of other forms of debt (only defaulted assets)

Argentina: Non-mortgage debt presents a 9.2% drop mainly caused by an exchange rate correction and banks’ reluctance to expand their portfolios, given the economic uncertainty ahead of primary elections that took place in Oct ‘23

Ecuador: Non-mortgage debt presents an increase in the third quarter caused by liquidity and credit supply restrictions. Mainly driven by a 5% increase in credit card debt in 3Q

Debt: Money borrowed by consumers at a point in time. Refers to amortized limit or outstanding balance depending on data collected from each region, except Spain which reports just defaulted assets because the Spanish Bureau manages negative data only.

Non-Mortgage: Includes Buy Now Pay Later, credit cards, installment loans, personal loans and automobile loans. Availability and coverage will vary by region.

Demand

Growth in card and personal loan demand across multiple regions.

Chart data is indexed as of Q4 2019.
*Data not reported for this region

North America

Canada: Non-mortgage demand primarily being driven by higher immigration. Mortgage demand is up year over year with first time home buyers as well as upcoming renewals driving inquiries

South America

Argentina: Non-mortgage inquiries have remained stable despite the economic context. Online inquiries remain strong in order to retain existing clients and focus on portfolio quality over new clients in the open market

Ecuador: Non-mortgage inquiries present a slight slowdown (-2%) due to political instability, fiscal and financing risks

Brazil: In 2023, the demand for credit remained stable, but decreased by about 10% compared to the previous year

Europe

United Kingdom: Annual growth rate for all consumer credit rose to 8.0% in September, the highest since November 2018, primarily driven by the annual growth rate for credit card borrowing reaching 12.5% in September

Spain: Shows an increase in credit demand in Q4’23 compared to the previous quarter which normally has low activity during the summer period

Oceania

Australia: Mortgage demand during Q4’23 returns to positive growth for the first time since 2021. Softer inflation brought temporary relief for consumers, slowing unsecured credit demand by 5% compared to last year

New Zealand: Average weekly credit demand in 2023 finishes 4.8% higher than 2022 except for home lending. Weekly mortgage demand for 2023 finished 4% lower than 2022 with notably higher volume into the new year

Non-Mortgage: Includes Buy Now Pay Later, credit cards, installment loans, personal loans and automobile loans. Availability and coverage will vary by region.

Utilization

Higher card utilization and delinquencies across most regions as consumers cope with cost of living pressure

Chart data is indexed as of Q4 2019.
*Data not reported for this region

Rising Card Delinquencies

United States: Credit card delinquency is continuing to increase and early delinquency (30+DPD after 6 months of opening) is continuing to increase for all score tiers, including prime

Canada: Vintage view of credit card delinquencies shows a much higher increase in newly opened cards after 6 months of opening (especially in the sub-prime segments)

Brazil: The delinquency rate for credit cards increased 18% compared to the last year

Revolving debt

United States: Credit card utilization has now reached pre-pandemic levels of ~22%. Credit card limits are 26% higher than pre-pandemic and credit card balances are 24% higher than pre-pandemic

Canada: Credit card utilization is increasing but the overall impact on utilization is being masked due to increasing growth in new credit card volume and higher credit limits being assigned to new cards

Argentina: The third quarter presents stable levels of credit card utilization. In a context of monthly double-digit inflation and liquidity restrictions, credit cards still remain the most common financial instrument as a way to manage monthly inflation

Ecuador: Credit card utilization is slightly increasing. Total credit card debt presents a 5% increase in Q4 and a 16% YoY caused by limited microcredits, liquidity restrictions and use of credit cards as financial leverage