Description

Providing the most comprehensive and up-to-date information and analysis of the US Secured Lending Consumer market including the behaviors, preferences, and habits of the consumer.

As a result of the recessionary impact of COVID-19, the US found itself amidst a historically low interest rate environment. Low interest rates proved advantageous for borrowers seeking secured loans; the cost of borrowing went lower, which drove demand higher for secured loans such as mortgages and auto loans and refinancing, throughout the pandemic.

Read on to discover more about the US Secured Lending consumer market, read our Banking Experience – US – March 2021 report, or take a look at our other Financial Services Market research reports.

Quickly understand

  • The impact of COVID-19 on consumer behavior and the secured lending industry.
  • Effect of COVID-19 on secured lending.
  • Most important factors in choosing a secured loan.
  • Consumer attitudes toward secured debt.

Covered in this report

Brands include: Figure Lending, JPMorgan Chase, Chime, Ally Financial, Bank of America, Capital One, Experian.

Secured loan types include: Residential mortgage, Auto loan, Secured credit card, Secured line of credit, Life insurance loan, Car title loan, Business loan, Pawnshop loan.

Expert analysis from a specialist in the field

This report, written by Amr Hamdi, a leading analyst in the Finance sector, delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Despite the pandemic, the secured lending industry still experienced mass demand due to historically low interest rates. The result was consumer interest in secured loan products such as mortgages increased throughout COVID-19. With a growing economy and improving consumer outlook, demand for secured loans currently sits in a healthy position. The implication of a booming economy does mean a hike in interest rates at some point in the future, which is likely to normalize borrower demand along with it. While the US economy is rapidly recovering, current unemployment rates still point to a significant amount of US households in a dire financial situation, with increasing debt and lack of income. These challenges are ones the financial services industry can aid consumers in moving into the next normal.


Amr Hamdi - Research AnalystAmr Hamdi

Finance Analyst

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this Report
    • Definition
    • COVID-19: market context
    • Economic and other assumptions
  2. Executive Summary

    • Top takeaways
    • A third of consumers are more in debt now than they were prior to COVID-19
      • Figure 1: Attitudes and behaviors toward secured debt, by generation, February 2021
    • Nontraditional lenders appeal most to financially struggling consumers
      • Figure 2: Attitudes and behaviors toward secured debt, by financial situation, February 2021
    • Home improvements are the most popular reason for taking out a secured loan
      • Figure 3: Reason for opening a secured loan, February 2021
    • Market overview
    • Impact of COVID-19 on Secured Lending
      • Figure 4: Short-, medium- and long-term impact of COVID-19 on secured lending, May 2021
    • Opportunities and challenges
    • Re-emergence
    • Recovery
  3. The Market – Key Takeaways

    • Low interest rates have led consumers to take on more secured debt despite the pandemic
    • Mortgage and auto loan delinquencies down during 2020, as lenders provided relief to struggling consumers
    • Unemployment rates continue to decline, but remain well above pre-pandemic levels
  4. Market Size

    • Low interest rates have led consumers to take on more secured debt despite the pandemic
      • Figure 5: Total US secure loan debt, by type, Q4 2003-Q4 2020
    • Low- and middle-income households avoiding secured debt due to the pandemic could have resulted in the decrease in secured loan accounts
      • Figure 6: Number of secured loan accounts, by type, Q4 2003-Q4 2020
    • Impact of COVID-19 on Secured Lending
      • Figure 7: Short-, medium- and long-term impact of COVID-19 on secured lending, May 2021
    • Lockdown
    • Re-emergence
    • Recovery
    • COVID-19: US context
    • Learnings from the last recession
  5. Market Factors

    • Mortgage and auto loan delinquencies down during 2020, as lenders provided relief to struggling consumers
      • Figure 8: Percent of balance 90+ days delinquent on secured loans, by type, Q4 2003-Q4 2020
    • DPI down after a second round of stimulus checks, but still up from 2019
      • Figure 9: Disposable personal income change from previous period, January 2007- February 2021
    • Consumer confidence should continue growing off the back of economic expansion, leading to more borrowing
      • Figure 10: Consumer Sentiment Index, January 2007- March 2021
    • Unemployment rates continue to decline, but remain well above pre-pandemic levels
      • Figure 11: Unemployment and underemployment, January 2007-February 2021
  6. Market Opportunities

    • Prioritize building relationships with borrowers instead of their collateral
    • Secured credit cards can be the stepping-stone toward building a credit history, or repairing the scores of those impacted by the pandemic
      • Figure 12: Chime Credit Builder, October 2020
    • Chatbots can help expedite the mortgage process to bolster the customer experience
  7. Companies and Brands – Key Takeaways

    • Ally revives its automated decisioning program amid growing consumer confidence
    • JPMorgan Chase encouraged refinancing to caution against rising rates
      • Figure 13: JPMorgan Chase direct mail, March 2021
    • Bank of America props up its secured credit card with a host of cash back rewards
      • Figure 14: Bank of America direct mail, February 2021
  8. Competitive Strategies

    • Figure leverages blockchain technology to expedite the HELOC process
      • Figure 15: Figure Lending direct mail, August 2020
    • Capital One continues to dominate mailboxes as vehicle sales pick up steam
      • Figure 16: Capital One direct mail, October 2020
    • Ally digitizes the home-buying experience
      • Figure 17: Ally Financial acquisition email, March 2021
  9. Secured Debt

    • Secured versus unsecured loans
  10. The Consumer – Key Takeaways

    • Over half of consumers have at least one form of secured debt
    • Home improvements are the most popular reason for taking out a secured loan
    • Interest rate is the most important factor for consumers looking for a secured loan
    • A third of consumers are more in debt now than before the pandemic
  11. What the Future Looks Like for Secured Loans

    • As the US economy grows, higher interest rates may normalize consumer demand for secured loans
  12. Type of Secure Debt

    • Over half of consumers have at least one form of secured debt
      • Figure 18: Types of secured debt, February 2021
    • Millennials’ secured debt stems from auto loans and secured credit cards
      • Figure 19: Types of secured debt, by generation, February 2021
    • Residential mortgages are concentrated among Gen X and Baby Boomers
      • Figure 20: Types of secured debt, by generation, February 2021
  13. Interest in Secured Loans

    • Consumers are most interested in auto loans
      • Figure 21: Interest in types of secured loans, February 2021
    • Gen Z and Millennials are most interested in residential mortgages and secured credit cards
      • Figure 22: Interest in types of secured loans, by generation, February 2021
  14. Reasons for Opening a Secured Loan

    • Home improvements are the most popular reason for taking out a secured loan
      • Figure 23: Reason for opening a secured loan, February 2021
    • Parents use their secured loans for wide-ranging needs
      • Figure 24: Reason for opening a secured loan, by parental status, February 2021
  15. Plans to Apply for a Secured Loan

    • Affluent consumers will continue seeking secured loans
      • Figure 25: Plans to apply for a personal loan, by household investable assets, February 2021
    • Parents plan on applying for secured loans
      • Figure 26: Plans to apply for a personal loan, by parental status, February 2021
  16. Important Factors in a Secured Loan

    • Interest rate is the most important factor for consumers looking for a secured loan
      • Figure 27: Most important factors in choosing a secured loan, February 2021
    • Older consumers value existing relationships, while younger ones look for online applications and recommendations from friends or family
      • Figure 28: Most important factors in choosing a secured loan, by generation, February 2021
    • Black consumers look for different factors in a secured loan compared to other groups
      • Figure 29: Most important factors in choosing a secured loan, by race and ethnicity, February 2021
  17. Secured Lending Effect on Financial Situation

    • Young consumers struggle the most with their secured loans
      • Figure 30: Secured lending effect on financial situation, by generation, February 2021
    • COVID-19 has left Hispanics struggling to pay their loans, while Black adults were most likely to default
      • Figure 31: Secured lending effect on financial situation, by race and ethnicity, February 2021
    • As parents are more open to taking on secured loans, they were also most likely to default
      • Figure 32: Secured lending effect on financial situation, by parental status, February 2021
  18. Attitudes and Behaviors toward Secured Debt

    • A third of consumers are more in debt now than before the pandemic
      • Figure 33: Attitudes and behaviors toward secured debt, by generation, February 2021
    • 41% of Millennials refinanced their mortgage during the pandemic
      • Figure 34: Attitudes and behaviors toward secured debt, by generation, February 2021
    • Minorities rejected for secured loans may seek out nontraditional lenders
      • Figure 35: Attitudes and behaviors toward secured debt, by race and ethnicity, February 2021
    • Nontraditional lenders appeal most to financially struggling consumers
      • Figure 36: Attitudes and behaviors toward secured debt, by financial situation, February 2021
  19. Appendix – Data Sources and Abbreviations

    • Data sources
    • Consumer survey data
    • Direct marketing creative
    • Abbreviations and terms
    • Abbreviations
    • Terms

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