CFPB: Credit Applications Mostly Recovered to Pre-Pandemic Levels
The Consumer Financial Protection Bureau published an issue brief showing consumer applications for auto loans, new mortgages and revolving credit cards had mostly returned to pre-pandemic levels by May.
The report said prime and near-prime consumers are driving this recovery as applications remain down from borrowers with subprime and deep subprime for all types of credit and, for borrowers with super-prime credit scores, applications are down for all types of credit but mortgages.
As with previous reports, the CFPB noted an increase in credit applications, particularly from borrowers with below prime credit scores, in conjunction with federal stimulus payments.
“While consumer credit applications have generally recovered to pre-pandemic levels in the aggregate, we see important differences across consumers,” said Acting CFPB Director David Uejio. “Both borrowers with super-prime and subprime credit scores are still not applying for credit as much as they were pre-pandemic.”
Other key findings:
–Auto loan inquiries saw a drop of 52 percent by the end of March 2020 and returned to their usual pre-pandemic trend by January.
–New mortgage credit inquiries saw a smaller drop in March 2020 compared to other types of inquiries and then surged. Subsequently, inquiries have exceeded their usual, seasonally adjusted volume by 10 to 30 percent, reflecting the unusually high activity in the mortgage market throughout the pandemic.
–Revolving credit card inquiries took the longest to recover from the initial March 2020 decline, until March, when the level of these inquiries reached back to their usual levels.
–Consumers with deep subprime credit scores showed the largest decline in auto loan inquiries compared to prior years, followed by inquiries from consumers with subprime credit scores. These consumers also showed declines in new mortgage and revolving credit card inquiries.
–Changes in auto loan and new mortgage applications were quite varied across the states while changes in credit card applications were generally uniform.
The report can be accessed here.
