Global Credit Trends

Executive Summary

Here are 3 top trends from 2024:

Unsecured credit demand is rising as consumer-facing industries are most impacted

Australia has seen a rise in unsecured credit demand since 2021 due to economic challenges, with the gap between secured and unsecured credit widening from 17% in 2021 to 32% in 2024. Hospitality workers are particularly affected, with unsecured credit inquiries jumping from 14% in 2021 to 43% by 2024. This increase, coupled with higher delinquency rates in consumer-facing industries, points to growing financial pressures on specific segments of the workforce.

Younger generations struggling to find footing in economy

Younger generations in the U.S. are experiencing an increasing financial strain due to rising costs, stagnant wages, and student loan debt. While older generations are maintaining or improving their ability to pay, Gen Z's has fallen by 3%. Plus, Increases in delinquency are most pronounced for Gen Z and Millennials, with Gen Z seeing an almost 2X increase in 60+ days past due delinquency post-pandemic

Canadian consumers are facing a widening financial divide

Canada’s Ontario province faces significant mortgage delinquency challenges fueled by higher interest rates, with a 90.2% surge in the severe delinquency rate compared to 20.4% in the rest of Canada. Conversely, rate cuts are bringing relief for some homeowners, stabilizing unsecured credit delinquencies and improving credit card repayment habits. Younger consumers are also showing vulnerability to economic changes; consumers under 26 saw a 19% annual increase in severe credit card delinquency rates in Q4'24.

Glossary of Common Terms & Sources

Overall Debt

While non-mortgage debt is increasing in many regions, India has shown substantial growth over the past few quarters in mortgage and non-mortgage debt, driven by supply-side factors and a strengthening economy.

Chart data is indexed as of Q4’19, except India which is Q4’21. The New Zealand index was rebased in Q4’21 due to account adjustments. Chart data may not include all countries represented in the chart legend.

Mortgage Debt

United States: Mortgage debt continues to increase, up 2% - 3% FY‘24 compared with FY‘23. While ‘23 and ‘24 high interest rates have kept originations lower compared to pandemic years, the Federal Reserve’s rate cuts have led to more new accounts in ‘24 than ‘23.

Canada: Steady rise in mortgage debt as new credit demand remained lower than past peaks.

Australia: Mortgage debt maintained growth of 4.5% from Q4’24. However, slower mortgage demand for the most part of ‘24 saw less growth in average limit per account at 7.3% against Q4’24 from double digit growth for over 2 years.

Brazil: Both mortgage debts and non-mortgage debts remained stable compared to Q3’24.

India: Mortgage debt increased by 12% YoY and non-mortgage debt increased by 31% annually.

Non-Mortgage Debt

United States: While non-mortgage debt continues to increase, the rate of increase is decreasing YoY; this is true for all product categories. Alternatively, non-auto installment loan debt is decreasing when comparing quarters YoY. Lenders are either tightening their policies or looking to tighten their policies ahead of rising delinquencies.

Canada: Total non mortgage debt in Canada at the end of ‘24 went up by 4.6% over ‘23. Non-bank auto loans drove much of this increase, rising 11.7% YoY, while the average non-mortgage debt per consumer reached $21,931, exceeding pre-pandemic levels.

United Kingdom: The gradual long term increasing trend in credit card balances continued throughout ‘24, likely driven by increased costs. Total credit card balances are up 5.6% YoY.

Spain: Slight increase in mortgage debt, which is still decreasing in the long term, while non-mortgage debt appears to be stable as already observed in the last year and a half

Argentina: The last quarter showed an increase in economic activity, evidenced by the growth of installment loan and auto debt.

Ecuador: Non-mortgage debt continues to slightly increase QoQ.

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

Economic pressures continue to push consumers towards unsecured credit, while the mortgage market returns in a controlled manner.

North America

Canada: The overall Canadian mortgage market showed signs of recovery, with new mortgage originations rising 39% YoY. First-time homebuyers returned, with a 28.2% increase from the extreme lows of purchases in Q4‘23. Non-mortgage lending remained subdued, with the exception of a surge in non-bank auto loans, which dominated new originations.

South America

Argentina: Demand in ‘24 continues with the positive trajectory observed since the start of ‘24, with an upward trend towards the end of the year.

Ecuador: Non-mortgage inquiries decreased 9.7% compared to Q3’24, reaching its lowest point in the last 4 years.

Brazil: In Q4’24, credit demand remained stable compared to the previous quarter.

Europe

Spain: Credit demand in 2H’24 slightly decreased with respect to the same period last year, a tendency that was not observed during 1H’24. In general, the credit trend of ‘24 showed similar patterns to ‘23.

Oceania

Australia: High interest rates and a drop in refinance activity compared to the year before resulted in less accounts opened in Q4‘24 YoY. However, Australia saw a second consecutive quarter of growth in mortgage demand, now at 2.7% YoY, suggesting a potential resurgence in consumer confidence.

New Zealand: Mortgage inquiries in Q4’24 increased by 12.1% compared to last year against the backdrop of falling retail interest rates. This is driven by borrowers shopping around in a competitive environment, a trend that has persisted for several months.

India: The automobile sector is one of the key drivers of the Indian economy and it contributes ~6% to India’s National GDP. Auto originations increased 10% QoQ in Q4‘24.

Credit Cards

Card delinquencies have risen in some regions due to economic pressures.

Card Utilization

United States: While the trend continues where utilization is highest in Q4 and drops slightly in Q1 the following year, utilization has been steadily increasing since the 2020 drop and has now reached pre-pandemic levels, likely as a result of increasing prices and depleting savings.

Canada: While credit utilization remained steady, overall credit card debt continued its upward climb, increasing by 7.8% YoY, though this marks the slowest growth rate since ‘22.

Argentina: In Q4‘24 balances and credit limits both increased by 25%, maintaining the ratio observed in the Q3‘24.

Ecuador: Credit card utilization remains stable due to increase in credit limits in the overdebt sector. Total credit card debt increased 2.8% in Q4’24.

Delinquency

United States: Despite a drop in Q2‘24 and Q3‘24, credit card delinquency in Q4‘24 is well above the last 5 years’ delinquency in terms of accounts and dollars continuing a trend towards consumer distress.

Canada: Credit card 90+ balance delinquency rate surpassed pre-pandemic levels.

Brazil: The delinquency rate for credit cards increased by 5%.

India: Credit card delinquency increased by 29 bps QoQ, signaling that credit card stress is increasing in the Indian economy.