Applications for Auto Loans, Mortgages, and Credit Cards Back to Pre-Pandemic Levels, According to CFPB Issue Brief

Aug 6, 2021Banks & Credit Unions, Federal Regulation, News

Last week, the Consumer Financial Protection Bureau (CFPB) published an issue brief finding that consumer applications for auto loans, mortgages, and revolving credit are back to pre-pandemic levels, a recovery mainly driven by prime and near-prime consumers. The CFPB found an increase in credit applications from borrowers with subprime credit scores in conjunction with stimulus payments.

“While consumer credit applications have generally recovered to pre-pandemic levels in the aggregate, we see important differences across consumers,” stated CFPB Acting Director Dave Uejio. “Both borrowers with superprime and subprime credit scores are still not applying for credit as much as they were pre-pandemic.”

The CFPB found that auto loan inquiries fell 52 percent by the end of March 2020, but returned to their pre-pandemic trend by January 2021. New mortgage credit inquiries fell by a smaller amount, but rose above their typical, seasonally adjusted volume by 10 to 30 percent. Both auto loan and new mortgage applications varied state-by-state.

Additionally, consumers with deep subprime credit scores had the largest decrease in auto loan inquiries, followed by borrowers with subprime credit scores. These same consumers showed drops in new mortgage and credit card applications.

The agency found that revolving credit card applications took a full year to recover to pre-pandemic levels, reaching those levels in March 2021. Also, changes in credit card inquiries were mostly uniform across states.

“We will continue to keep a close watch on the marketplace as the economic recovery continues, to help ensure all consumers have access to financial products and services that are fair, transparent, and competitive,” Uejio said.

To prepare the issue brief, the CFPB used its Consumer Credit Panel, which shows credit records kept by the three nationwide consumer reporting agencies (NCRAs).

Read the full issue brief here.

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