Greetings,
US Q3 GDP showed 3.5% annualized growth, well above potential growth of 2%. Growth slowed from the blistering 4.2% pace in Q2 due to rising inventories and lower consumer spending:
Source: WSJ, PeerIQ
The Fed remains on track to raise rates for the fourth time this year in December, but is signaling a dovish tone beyond December. Fed Chair Powell’s comments this week suggested that the Fed Funds Rate may be close to its neutral rate. The comments led to the market ratcheting down rate hikes in 2019 from 4 to 1.
VantageScore analyzed the credit habits of millennials in their monthly newsletter. Millennials with thin credit files have, on average, similar incomes to their counterparts with thicker credit files. This behavior is contrary to that seen among prior generations. You can read the full study here.
Source: VantageScore, PeerIQ
Data to Insights: How do credit card accounts perform when borrowers also have a personal loan?
PeerIQ analyzed the performance on credit cards of borrowers with a personal loan. We looked at the performance of borrowers with credit cards who take a personal loan and compared them to those who don’t. We asked to what extent are personal loans substituting for credit card balances? Controlling for credit score and balances, do credit card borrowers with a personal loan perform better or worse or similar than borrowers without a personal loan.
The answer may surprise you. Reach out for a demonstration of the PeerIQ analytics platform – powered by thru-cycle loan-level TransUnion data – to answer these questions and many more.
Source: PeerIQ, numbers show above are illustrative, reach out for actuals
| Save the Date: PeerIQ’s Webinar on Lending Earnings Insights
PeerIQ will be hosting a webinar on Wednesday 12/12 at 2pm EST based on a study of Lending Earnings Insights where we analyze the earnings of bulge-bracket banks, credit card issuers, and FinTechs looking for any signs of changes in the credit cycle and related topics. You will also see an overview of our newly-launched products – Benchmarking and Stress Testing. Click here to register and to add the invitation to your calendar.
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PeerIQ is hosting its annual holiday party on Wed Dec 12th. If you are a customer or partner and haven’t received an invite, please reach out for details!
Industry Update:
- Third-quarter growth unrevised, headwinds increasing (Reuters, 11/28/18) US GDP grew at 3.5% in Q3 and stays on pace to achieve 3% growth for 2018.
- “I Hereby Confess Judgment” (Bloomberg, 11/20/18) Arcane laws allow cash advance lenders to seize borrowers’ assets if they miss a payment.
- Fed Emphasizes Flexible Policy Path After Likely December Hike (Bloomberg, 11/29/18) Fed Chair Powell’s comments this week suggested that the Fed Funds Rate may be close to its neutral rate and that the Fed might pause rate hikes in 2019.
- Mick Mulvaney’s Year at CFPB Has Pleased Financial Industry, Which Wants More (WSJ, 11/25/18) Mulvaney has pulled back in enforcement actions, eased supervisory activities, and pledged to redo a new payday-loan rule.
- Small banks warned not to over-rely on fintech partnerships (American Banker, 11/29/18) The Bank Policy Institute warns that FinTech partnerships should not be a substitute for technology investments.
- Millennial credit habits: a major shift (VantageScore, November 2018) Millennials with thin credit files have, on average, similar incomes to their counterparts with thicker credit files.
- CommonBond Teams Up with Investor Fifth Third Bank on Student Loans (CrowdFund Insider, 11/15/18) In continuing bank-fintech partnerships, FifthThird has partnered with CommonBond to refinance student loans.
- Banks flock to personal lending, but at what risk? (American Banker, 11/22/18) Fintech personal loan borrowers are not likely to consolidate their debt and borrow beyond their means, leading to potentially higher defaults.
- Cash-Strapped Millennials Are Turning to Installment Plans to Pay for T-Shirts and Jeans (Bloomberg, 11/29/18) POS financing now allows shoppers to even buy low-priced items on credit.
- Prosper Performance Update (Prosper Blog, 11/30/18) Prosper’s performance update shows that WAVG borrower interest rates increased by 7 bps MoM.
- How Marcus by Goldman Sachs took to the streets of New York to market its high yield savings account (TearSheet, 11/26/18) GS conducted a grassroots campaign to educate people on their high-interest savings accounts.
Lighter Fare:
- 10 Breakthrough Technologies 2018 (MIT Tech Review, December 2018) 3D metal printing, real-time translation, and smart cities are among the breakthrough technologies for 2018.