Subprime Demand Drives US Loan Growth To New Heights

Subprime borrowers are now a major driver of U.S. loan growth, particularly in unsecured personal loans, with balances and borrower counts at record levels and rising delinquencies signaling growing household stress.

What the headline refers to

• TransUnion’s latest Credit Industry Insights Report shows U.S. unsecured personal loan balances rose about 10% last year to a record roughly $276 billion, largely driven by subprime demand.

• The number of consumers with these unsecured loans climbed to about 26.4 million, up from 24.5 million a year earlier, underscoring broad-based uptake among lower-credit tiers.

Role of subprime borrowers

• Robust demand from subprime customers is specifically cited as the key factor behind the growth in unsecured loan balances, as lower‑income and lower‑score borrowers tap personal loans to manage expenses.

• TransUnion and other recent analyses also show subprime’s share of loan originations has been rising again post‑pandemic, with subprime borrowers accounting for roughly the mid‑teens percentage of new loans in late 2025, the highest since 2019.

Why demand is rising

• As interest rates eased from prior peaks, many consumers have been consolidating higher‑rate credit card balances into installment‑style unsecured loans, which can offer fixed payments and sometimes lower effective rates.

• Lower‑income households are using these loans as a stopgap to cope with persistent cost‑of‑living pressures that have outpaced wage gains, effectively substituting credit for real income growth.

Other products and the broader credit mix

• Credit card lenders have also increased lending to lower‑income consumers, with total card balances rising about 4% last year to roughly $1.15 trillion, even as issuers trim initial credit limits to manage risk.

• TransUnion now projects faster growth in new unsecured loans in 2026 than previously expected (revising its forecast up into low‑double‑digit growth), and also forecasts about 4% growth in both mortgages and home refinancings as more borrowers gain access to refinancing from higher‑rate vintages.

Risk signals

• Delinquency rates on unsecured credit have been “slowly rising” in recent quarters, consistent with broader data showing elevated subprime delinquencies, particularly in auto loans.

• Separate analyses report subprime auto borrowers 60+ days delinquent at record or near‑record levels (around the high‑6% range in recent readings), echoing the theme that loan growth is being driven by increasingly stretched households.