“Both the mortgage and credit card markets are performing extremely well, with increased consumer participation and continued low delinquency rates. Millions of borrowers have gained access to credit card loans in just the past few years. And despite the fact that more consumers – and more non-prime consumers – are entering the housing market, delinquency levels have remained in check and balances are growing. This points to responsible lending practices and a consumer base that is clearly in a better position to make payments on their loans,” added Becker, who works in TransUnion’s financial services business unit.

Mortgages

TransUnion’s 2.06% projection for the year-end 2016 mortgage delinquency rate would place this metric in the range traditionally observed prior to the mortgage crisis.

“We have observed that a ‘normal’ delinquency rate fell between 1.5% and 2% in the past, and our forecast puts the nation back at this level,” Steve Chaouki, executive vice president and head of TransUnion’s financial services business unit, said. “Newer vintage mortgage loans have been performing at this level for the last few years, but a combination of factors such as the funneling of bad mortgage loans through the foreclosure process, an improvement in the employment picture and an uptick in housing prices were needed to get back to normal.”

Mortgage debt per borrower has also slowly gained in recent years, which is partly due to a rebound in housing prices. Debt levels are expected to experience a $9,000-plus gain by the end of 2016 from the year-end low observed in 2012.

“This is a clear indicator that housing prices are recovering and consumers are gaining access to more mortgage loans,” Chaouki said. “Fannie Mae’s recent announcement that it would use trended data in the assessment of mortgage applicants could also very well boost mortgage originations in the second half of 2016.”

A previous TransUnion analysis found that with the use of trended data, the percentage of consumers in the super prime risk tier would increase from 12% of the population to 21%. Super prime consumers generally have the greatest access to new loans at the lowest pricing, the report read.

TransUnion data show the number of mortgage accounts has remained relatively low for much of the last three years, though growth has been observed during the last two years. As of third quarter 2015, which represents the latest available data, there were 52.6 million mortgage accounts, approximately 7 million fewer than in the third quarter of 2009, when there were 59.6 million.

“We are a long way from returning to pre-recession levels in terms of mortgage accounts, but changing consumer preferences for housing also may play a role in this slow recovery,” Chaouki said. “If the economy continues to perform well, we believe the net number of mortgages will increase over the next year.”

Credit cards

The serious credit card delinquency rate was expected to remain at around 1.5%, the year-end levels observed for the last four years. As usual, seasonal movements will occur throughout the year, but consumers are expected to maintain their strong payment performance, TransUnion said.

The credit card industry has been performing well even as it has extended credit to millions of additional consumers during the last few years. As of the third quarter of 2015, there were 368.8 million credit card accounts, up from the 354.8 million figure the same quarter last year. Comparatively, in the third quarter of 2009, there were only 337.8 million credit card accounts.

“As delinquency rates for credit cards remain low, lenders are making card credit increasingly more available to consumers across the risk spectrum,” Becker said. “Those consumers are generally accepting those card offers, using that card credit and managing the debt responsibly. In short, these are the hallmarks of a credit market that is functioning extremely well.”

Credit card debt per borrower was expected to remain essentially flat in 2016, dropping from an estimated $5,281 in fourth quarter of 2015 to $5,262 in the final quarter or 2016. Those numbers are well below levels observed just after the Great Recession, when the average outstanding balance was $6,051 in the fourth quarter of 2009, the report read.

While debt levels have dropped more than 10% since 2009, average credit lines have not changed much in the last six years, decreasing from $21,942 in the third quarter of 2009 to $21,613 in the same quarter in 2015.

The biggest changes to credit lines occurred with subprime consumers, those with a credit score lower than 601.

In the third quarter of 2009, subprime consumers had $6,993 in available credit; that dropped to $5,136 as of the third quarter of 2015.

“Credit card lenders manage their portfolio risks by limiting credit access for higher risk borrowers,” Becker said. “Much of this risk management occurred between 2009 and 2012, but we’ve seen stabilization on this front for the last three years. As the economy continues to improve and credit card performance remains strong, it’s quite possible consumers in the subprime risk group could see more credit opportunities in the near future.”