Stefan Lehtis, Executive Recruiter at Smith Hanley Associates, discusses how the current economic outlook will impact consumer credit recruiting.
Forecasts for 2016 predict that consumer lending will have finally recovered from the recession by the conclusion of the year. TransUnion says it expects consumer credit markets, including mortgage and credit cards, to have fully rebounded and put consumers in a better position to pay off their debts.
Looking inside the mortgage forecast, TransUnion projects a delinquency rate of 2.06% for 2016. We have observed rates dropping steadily since reaching peak levels of 6.42% in 2009. Reaching this 2% threshold would put the nation back at a more average level that existed prior to the mortgage crisis. This normality creates the opportunity for more accepted mortgage applicants. More mortgage business means more mortgage analysis and more credit policy and risk openings.
Credit card markets are also expected to perform strongly. As of recent years, consumers have been able to avoid serious delinquency rates, and there is no sign of that changing. Volume of credit card accounts being issued is on the rise because of the utilization of new data and analytical solutions. There is a new wave of solutions being used to score credit and create new opportunities for consumers to access credit accounts regardless of where they may fall on the risk spectrum. Debt per borrower is expected to remain flat in 2016, moving from an estimated $5,281 in Q4 2015 to $5,262 in Q4 2016. These debt levels are significantly lower than those following the recession ($6,051 in Q4 2009), indicating there exists considerable borrowing capacity available in the consumer market.
On Dec 16, 2015, the Fed raised short-term interest rates by 0.25%, the first hike of its kind in nearly 10 years. It is not a large change and interest rates do remain extremely low; however, the ripple effect of the hike will likely impact rates across the market and consumers can expect to see these changes throughout 2016. Given the long period of extremely low interest rates that we are now emerging from, we can expect some uncertainty in how this affects both supply and demand for credit. As the market sorts through the slightly unfamiliar landscape of rising rates and challenging risk scenarios, quantitative talent should see a continuing high demand for the expertise they posses. At Smith Hanley we see a particular need for those candidates with model risk, regulatory compliance and fraud prevention experience.