We’re excited to share our Credit Risk insights from Q4 2024! This quarter, our team of experts dove into recent trends and observations across US consumer credit asset classes. We also continued our monitoring of potential post-inauguration impacts to consumer lending.
Headwinds:
⚠️ Auto loan delinquencies showed no signs of improvement in Q4, with elevated delinquencies persisting across credit segments.
⚠️ Total credit card delinquencies also continued rising in Q4, driven primarily by worsening in near-prime and subprime.
⚠️ The student loan repayment on-ramp ended in September, and severe delinquencies are expected to begin appearing on credit reports in early 2025.
Tailwinds:
✅ In both card and PL, early performance in 2024 vintages aligns with 2023 vintages, with sustained improvement over 2022 originations due to credit tightening.
✅ The Federal Reserve reduced the interest rate by 50 basis points in September, 25 basis points in early November, and another 25 basis points in mid December.
✅ Falling inflation and falling wage growth netted out to the strongest continued real wage growth since early 2020.
Please reach out to any of our authors: Licheng Du, Johnny Antoun, Matthew Cha, Walker Flythe, or Scott Barton if you have any questions or want to discuss the latest industry trends.