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  • CFPB examines pandemic effect on access to new credit

    Federal Issues

    On August 26, the CFPB released findings regarding trends in credit cards, mortgages, and auto loans for consumers through the Covid-19 pandemic. The post—the fifth and final in a series documenting trends in consumer credit outcomes during the Covid-19 pandemic—examines how access to new credit and the amount of extended credit for new account holders have been impacted by the pandemic. An August 2020 Bureau report (covered by InfoBytes here and updated here) found that while credit limit increases seemed to have been halted for many consumers, there was not a pronounced reduction in available credit card credit since the start of the pandemic (the 2020 report did not discuss access to new credit trends). According to the Bureau’s most recent report, access to new credit declined for credit cards but increased for mortgages and auto loans during the Covid-19 pandemic. Among other things, the Bureau noted that early in the pandemic, the success rate of credit card inquiries declined from around 45 percent in January 2020 to just over 30 percent in May 2020—a “drop well beyond what could be expected from seasonal variation.” Additionally, the volume of credit card inquiries also dropped substantially and did not recover until March 2021, with credit card inquiry success rates also similarly declining “across credit score groups as well as across age groups and subgroups of consumers classified by their census tract or county characteristics.” 

    Although the report noted that there was “a small and transitory dip” for auto loans in March and April 2020, by February 2021, success rates for auto loan and mortgage inquiries were well above pre-pandemic levels. According to the Bureau, “[t]his result for auto loan and mortgages inquiries contrasts somewhat with responses to the Federal Reserve’s survey of bank loan officers, which indicate that large banks tightened lending standards on auto and mortgage loans during 2020, only loosening standards in 2021.”

    Federal Issues CFPB Credit Cards Mortgages Auto Finance Covid-19 Consumer Credit Outcomes

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  • CFPB examines pandemic effect on card limits

    Federal Issues

    On August 11, the CFPB released findings regarding trends in credit card limits for consumers throughout the Covid-19 pandemic. The post—the fourth in a series documenting trends in consumer credit outcomes during the Covid-19 pandemic (the first covered by InfoBytes here)—examines whether “credit has tightened on existing credit card accounts” and if “financial institutions cut limits or closed accounts” during the pandemic. As previously covered by InfoBytes, last August, the Bureau issued a report examining trends through June 2020 in delinquency rates, payment assistance, credit access, and account balance measures, which showed that generally there was an overall decrease in delinquency rates since the start of the pandemic for auto loans, first-lien mortgages, student loans, and credit cards. According to the Bureau’s recent findings, starting in March 2020, credit limits for prime and near prime borrowers broke with their previous upward trend, largely flattened out, then began to grow more quickly for these groups in February 2021. Researchers also found that for subprime and deep subprime borrowers, there was nearly no change in credit limits, though the trend ticks upward toward the end of 2020. Additionally, the spike in accounts being closed early in the pandemic seems to have been short-lived because “[a]fter the spike in closures in May 2020, the total number of account closures declined through July and then returned to pre-COVID-19 levels through at least May of 2021.”

    Federal Issues CFPB Covid-19 Credit Cards Consumer Credit Consumer Finance Consumer Credit Outcomes

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  • CFPB examines reported assistance trends on consumers’ credit records

    Federal Issues

    On July 13, the CFPB released findings regarding trends in reported assistance on consumers’ credit records. The post—the second in a series documenting trends in consumer credit outcomes during the Covid-19 pandemic (the first covered by InfoBytes here)—examines consumer month-to-month transitions into and out of assistance from January 2020 to April 2021. As previously covered by InfoBytes, last August, the Bureau issued a report examining trends through June 2020 in delinquency rates, payment assistance, credit access, and account balance measures, which showed that generally there was an overall decrease in delinquency rates since the start of the pandemic for auto loans, first-lien mortgages, student loans, and credit cards. According to the Bureau’s recent findings, as of March 2021, auto loans and credit card accounts with assistance were slightly above pre-pandemic levels, and the share of mortgages and student loans on assistance continued to be significantly higher than pre-pandemic levels. Researchers also found that some communities have been disproportionately affected by the health and economic shocks of the pandemic: “majority Black census tracts, majority Hispanic census tracts, older borrowers and borrowers in counties hit hardest by COVID cases and layoffs were most likely to receive assistance in the early months of the pandemic.” Additionally, consumers in majority Hispanic census tracts were “more likely to exit assistance, but consumers in majority Black census tracts were somewhat less likely to exit assistance than their counterparts in majority white census tracts.”

    Federal Issues CFPB Covid-19 Consumer Finance Credit Cards Auto Finance Mortgages Student Lending Consumer Credit Outcomes

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  • CFPB reports low delinquency rates despite Covid-19

    Federal Issues

    On June 16, the CFPB released findings on delinquency trends for auto loans, student loans, mortgages, and credit cards. The post—the first in a series that will document consumer credit trend outcomes during the Covid-19 pandemic—examines how trends have evolved since June 2020. As previously covered by InfoBytes, last August, the Bureau issued a report examining trends through June 2020 in delinquency rates, payment assistance, credit access, and account balance measures, which showed that generally there was an overall decrease in delinquency rates since the start of the pandemic among auto loans, first-lien mortgages, student loans, and credit cards. According to the Bureau’s recent findings, as of March 2021, new delinquencies remain below pre-pandemic levels, despite a slight rise since July 2020 in auto loan and credit card delinquencies. These levels, the Bureau noted, may be attributed to federal, state, and local policy interventions that provide payment assistance and income support to consumers. Researchers also found that overall trends in new delinquencies were consistent across credit score groups, although “trends were more pronounced for consumers with lower credit scores.” Additionally, the Bureau reported that while stimulus payments and increasing vaccination rates may boost economic activity and keep delinquency rates down, accounts that would have been delinquent in the absence of payment assistance may begin to be reported as delinquent as assistance programs begin to end. Later this year, the Bureau will release a post in this series discussing payment assistance trends since June 2020.

    Federal Issues CFPB Credit Cards Covid-19 Auto Lending Student Lending Consumer Finance Consumer Credit Outcomes

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