Consumers beginning to better manage debt during pandemic economy

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Published Date 8/21/2020

What goes up must come down. Or so the lyrics to a popular old Chicago tune go. As for those in distress over the current COVID economy, for the first time since March, the total percentage of accounts in “financial hardship” for auto, credit card, mortgage, and personal loans fell across the board in July.

In a credit snapshot provided by Transunion, the percentage of accounts with mortgage loans in financial hardship declined from 6.79% in June to 6.15% in the month of July. HousingWire’s Alex Roha says, “The report defines accounts with deferred payments and forbearance programs as those in financial hardship and credits government stimulus and accommodation programs provided by lenders with helping the market withstand challenges in the near-term.”

He goes on to say that according to the report, the percentage of borrowers in 30-day delinquency and 60-day delinquency leveled off from the previous month at 1.81% and 1.08%, respectively. “Overall, the consumer credit market has been performing quite well despite the obvious challenges brought on by the COVID-19 pandemic,” said Matt Komos, vice president of research and consulting at TransUnion. “It’s a reassuring sign that delinquency levels have remained relatively low – especially as the percentage of consumers in financial hardship status has started to decline.”

Roha also reports that as government assistance continues to spur debate across the country and moratoriums near or pass expiration dates, concerns about the ability to pay bills and loans is at its highest level to-date among impacted consumers at 77%. He adds that 21% of consumers are worried about the ability to pay their mortgage, while 35% are concerned about making their rent payment. Among the respondents who said their household had been affected by the loss of their job (19%), 54% of those are renters.

“How consumers are able to manage debt levels and access to credit will be a key indication of economic recovery in the coming months,” Komos said.

Source: TBWS

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