US financial institutions predict that by 2022, citizens will incur debt to pay for home renovations and finance large purchases. To do this, they will need personal loans that provide financing for combine debt that will have high interest rates.
According to the TransUnion Credit Bureau Consumer Credit Forecast for 2022, demand for personal loans is expected to increase as consumers look for ways to pay off rising credit card balances.
For this reason, financial institutions are expected to receive more applications for personal loans both from selected borrowers with excellent creditworthiness, as well as from borrowers. with a credit rating below 660.
“Lenders are looking for growth, which is looking at expansion, again, for the sub-consumer segment,” said Charlie Wise, vice president of TransUnion.
TransUnion predicted that there would be 20 million lenders serving the United States this year. It is an unprecedented increase, from only 2020 14.2 million institutions operate throughout the country.
“This growth will be driven by a return on demand for credit card group loans as card positions increase,” said Liz Pagel, TransUnion’s Deputy CEO.
According to the TransUnion 2021 Lending Industry Outlook quarterly report, the private lending industry saw growth among borrowers with a credit rating between 300 and 660.
In the fourth quarter of last year, private credit institutions for subordinated applicants increased by 47% from the previous year. TransUnion expects this trend to continue in 2022 as lenders continue to increase short-term loan applications for borrowers with a subordinated loan history.
“The economy continues to grow and these signals encourage lenders to focus not only on less risky consumers but on providing those who can be considered as higher credit risksaid Wise.
TransUnion predicts that applications for personal loans will increase by 11% for subprime borrowers by 2022, which is slightly less than the estimated 14% growth among major consumers. However, due to more subprime mortgages, defaults are expected to rise slightly.
Start investing your money in cryptocurrencies and get Free Bitcoin when you buy or sell 100$ or more if you register in Coinbase