Executive Summary

Here are the top 3 trends across the globe from the first half of 2023:

Sustained Mortgage Pressures

Consumers taking action to reduce their short-term mortgage burden

In the UK, significant growth in the proportion of mortgage originations with loan terms of 30+ years is evidence of consumers looking to spread the cost of mortgage payments. Over the course of the last year the proportion of mortgage originations with loan terms over 35 years has more than doubled, increasing from 3.4% to 7.7%. However, lenders are likely less willing to delay mortgage maturity in cases where a consumer’s loan term already extends into retirement age. Right now, 41% of UK mortgages are held by consumers who will already be beyond the UK retirement age at loan maturity.

Spending Pull Back

Growth in consumer spending is finally starting to slow

In Canada, the rise in post pandemic spending has slowed. Average credit card spend per credit card consumer went up by 22.7% YoY in Q2 2022 but Q2 2023 saw a much smaller increase of 3.7%. The restraint in credit card spend was more prominent for mortgage holders and higher income segments. Those who can scale back on spending to offset credit payment obligations are doing so while lower income households are struggling to keep spending down amidst rising costs.

Student Loan Impact

Repayments expected to affect younger consumers more

Student loan debt affects almost 40M consumers in the US and resuming payments will put stress on personal budgets, averaging a 17% increase in monthly debt commitment - 24% in the case of Generation Z consumers. US consumers between the ages of 18-39 hold 55% of the $1.5 trillion student loan debt, with the average loan being $38,000 per consumer.

As of October 1, 2023, Equifax anticipates federal student loan servicers to begin reporting updated balances for consumers. Insights about student loan repayments and the impact will be provided in the Full Year 2023 Global Credit Trends Report (to be published in Q1 2024).

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