Unsecured personal loans have risen by around 30% more than pre-pandemic levels, according to a report by PeerIQ.
The tech platform which tracks online lending says:
” it appears that lenders are reaching down the credit spectrum to originate loans, with the below prime originations marginally higher than in prior year periods (1Q20 – 62.3% below prime, 1Q21 – 63.2% below prime, 1Q22 – 66.1% below prime). Fintech lenders led the growth, accounting for 37.7% of all unsecured personal loan originations, up from 31.4% in 1Q21 and 28.3% in 1Q20.”
Regarding specific online lenders, PeerIQ reports that origination volumes have been robust when comparing Q2 to Q1 2022:
- OneMain +31.7%,
- LendingClub +19.4%,
- Oportun +9.8%,
- MoneyLion +7.6%,
- Enova (Consumer) +7.3%
SoFi and Navient were impacted by the student lending moratoriums as well as rising rates in the housing market. Upstart apparently declined as lenders “temporarily paused or reduced” originations. These three online lenders bucked the trend and showed a decline.
All of the above lenders delivered increases in online lending when comparing year over year numbers for Q2 – with the exception of Navient.
While the growth is encouraging one must wonder if it is sustainable due to the choppy economic environment which is in a recession with interest rates rising. Jumping ahead, the next question is when will the Fed stop or reverse its battle with inlfation.