A new report from online lending data provider DV01 indicates that this sector of Fintech continues to move towards “normalcy” following the advent of COVID-19 and the ensuing economic disruptions.
The report says online lending is displaying “resiliency” as origination volumes are now only 34% lower year over year compared to 38% lower in September and 56% July versus the year prior.
Many online lenders allowed for loan modifications when the pandemic hit. Borrowers were given the option to delay payments as issuers recognized the need to provide relief during the unprecedented event.
DV01 reports that repayment rates on modified loans continue to increase even without a second stimulus package.
Over 85% of all COVID-19 modified loans have resumed some form of repayment. Total delinquencies stand at 3.8%, a slight increase over the past couple of months but well below historical averages.
Most lending platforms tightened credit standards as the economy faltered. DV01 posits that volume is increasing which may mean underwriting may be loosening from historically tight levels.
October loan volume increased 5.5% month over month, slightly lower than the increases observed in August and September. The slowdown is said to be primarily due to fall being a traditionally slower issuance cycle. Overall, origination volumes are now only 34% lower year over year compared to 38% lower in September.
So when will the sector return to growth?