CHICAGO (10/10/14)--A new TransUnion study found that the consumer loan wallet--the composition of loans that people typically carry--has materially changed for both the youngest and oldest segments of the population during the last decade.
The study found that student loans have left the greatest imprint on consumers ages 20-29, with their share of the consumer wallet nearly tripling in the last nine years. In 2005, student loans made up 12.9% of the total loan balance share for this age group. This percentage increased to 21.1% in 2009 and surged to 36.8% in 2014.
At the same time, older consumers have seen loan growth in every key lending category. While average mortgage balance per borrower declined about 2% for the overall adult population between 2009 and 2014, consumers 60 and over are the only age group to see a rise in average mortgage balance. This growth in average balances for consumers age 60-plus was also seen in auto and home-equity line of credit (HELOC) accounts, while average card balance per borrower for this oldest tier has grown since 2011.
The consumer loan wallet is defined by breaking down the average total borrowing of consumers in different age tiers by the average percentage of that total balance in each loan type, including mortgage, auto, card, home equity line of credit union, student and all other loan types.
The impact of student loans was felt by all age groups--not just the youngest segment. As of 2014, they made up 7% of the consumer wallet for all U.S. consumers ages 20 and over with loans of any type. In 2005, student loans accounted for just 2.8% of the overall consumer loan wallet. From a dollar perspective, the average student loan balance per consumer with one or more student loan accounts jumped to $29,575 in 2014 from $17,442 in 2005.
While the wallet share of student loans for consumers ages 20-29 nearly tripled between 2005 and 2014, average balances per borrower with a student loan increased 61%--to $25,525 in 2014 from $15,853 in 2005. At the same time, the percentage of credit-active consumers ages 20-29 with a student loan also has risen to nearly 51% in 2014 from 31% in 2005.
Both wallet share and balances for the 20-29 age segment rose for one other major lending category--auto loans. Wallet share increased to 14.1% in 2014 from 11.6% in 2005, while average balance per auto loan borrower rose to $14,637 from $13,721.
Surprisingly, the 60-plus age group has seen a rise in student loan debt similar to the one observed for the 20-29 age group. While the incidence of student loans among 60-plus consumers remains below 5% in 2014, average student loan debt per borrower with a student loan has risen to $27,168 in 2014 from $14,696 in 2005. The study also found that 48% of these loans include a senior consumer as a co-signer.
The study also found that the 60-plus age segment is the only one in which prime borrower mortgage participation--the percentage of consumers with a prime or better credit score who have a mortgage balance--has increased since 2009, moving up to 32% in 2014 from roughly 27%. All other age tiers saw a reduction in prime borrower mortgage participation rates over that span. Participation rates in other loan categories--credit card, auto and HELOC--increased for age 60-plus consumers over that time as well.