TransUnion’s newly released Q4 2020 Industry Insights Report reveals rising delinquencies and a continued decline in consumer demand for credit, while younger generations appear to be driving credit growth.
Overall demand for consumer credit products typically linked with discretionary spending have the hardest hit — with unsecured revolving lines down 35.7% YoY and credit cards dropping by -27.1% YoY. At the same time, improved housing affordability has seen a surge of 8.3% YoY in mortgage enquiries.
While delinquencies remain lower than in other mature credit markets, the challenging economic environment resulted in a deterioration in credit card performance. Lenders will remain cautious until they are able to adjust their risk strategies in line with changing consumer behaviours. Note that generational preferences and behaviours play an important role — where younger generations drive credit growth across the wider consumer credit market.
Table 1 : Q4 2020 metrics for Major Consmer Credit Products in Hong Kong
“Although headline figures show an overall decline in consumer credit market activity, when we look deeper into generational behaviours, there are some meaningful trends emerging that may shape the outlook for 2021.”
Francis Lau, Director of Research and Consulting for TransUnion Asia Pacific