Mercator Advisory Group projects that portfolio growth will be flat in 2019 and now the WSJ predicts delinquency erosion will continue, along the lines we mentioned various times in 2017. WSJ cites a wide variety of metrics from the Federal Reserve, Moodys and Thomson Reuters.
The first chart calls out rising interest rates on credit card debt, showing the moving average rise to 14% by
year end, up nearly 400 basis points.
Delinquencies will grow from the high 5% range to the mid 6% range in 2019.
Next, Moody’s Investor Research summarizes credit card performance showing deterioration since March 2018. In the chart, you will see the 30+ day delinquency metric move out of the “strong economic adjusted performance” range, where it sat between March 2012 and March 2016, into “average status”, then in mid-year, classified as “weak economic adjusted performance.”
In the misery loves company department, deteriorating credit card performance follow upward trends in residential mortgages and off-the-charts deterioration in auto loans.
The article includes several other economic indicators and very little text, but one thing is clear. The party is over for easy credit card returns. It is time to tighten up lending and collection functions.
…brace your self for an exciting 2019!
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group