The Consumer Financial Protection Bureau has published an issue brief showing that consumer applications for new mortgages, auto loans and revolving credit cards had mostly returned to pre-pandemic levels by May 2021. Prime and near-prime consumers are driving this recovery as applications remain down from borrowers with subprime and deep subprime for all types of credit and, for borrowers with superprime credit scores, applications are down for all types of credit but mortgages. The report also provides a state-by-state analysis of the change in credit applications for auto loans, new mortgages and revolving credit cards.
“While consumer credit applications have generally recovered to pre-pandemic levels in the aggregate, we see important differences across consumers,” says David Uejio, CFPB’s acting director. “Both borrowers with superprime and subprime credit scores are still not applying for credit as much as they were pre-pandemic.”
New mortgage credit inquiries saw a smaller drop in March 2020 compared to other types of inquiries and then surged. Subsequently, inquiries have exceeded their usual, seasonally adjusted volume by 10 to 30 percent, reflecting the unusually high activity in the mortgage market throughout the pandemic.
Consumers with deep subprime credit scores showed declines in new mortgage inquiries. Changes in new mortgage applications were quite varied across the states.