Serious delinquency rates have declined while originations have remained conservative with 1.4 million in Q1 2019, according to a new report from TransUnion. The report found that where there is growth, it is coming from the Gen Z demographic who are 18 years or older.
The Q2 2019 TransUnion Industry Insights Report states that Approximately 14 million Gen Z consumers (44% of this group) were carrying a balance as of Q2 2019, up from 11 million in Q2 2018. Additionally, the number of Gen Z consumers who were credit eligible (18 years or older) increased by 4.5 million in the last year, rising to 31.5 million in Q2 2019. Over the next three years, it is anticipated that another 13 million Gen Z consumers will become credit eligible.
“Both the newest and oldest members of the credit-eligible Gen Z generation are beginning to enter the credit market for the very first time,” said Matt Komos, vice president of research and consulting at TransUnion. “The rapid growth in Gen Z credit activity is occurring despite many of these individuals having grown up during the Great Recession. Though the recession itself lasted less than two years, its impact was felt for several years afterward. As we see more members of this group come of age, we naturally expect continued growth in credit activity by Gen Z, which we will monitor closely to compare to the behaviors of previous generations.”
Just 319,000 of Gen Z carries a mortgage, compared to 68,368,000 of all generations. Despite the low base, mortgages had the largest year-over-year growth rate spike with Gen Z consumers (112%). Gen Z also saw significant year-over-year gains in other credit products, including auto loans (42%), credit cards (41%), and personal loans (45%). Credit cards are the most popular product among Gen Z at 7,746,000 customers as of Q2 2019, followed by auto loans at 4,376,000 carrying a balance.