TransUnion: Mortgage, home equity lending grow despite high rates

Mortgage originations and home equity lending both increased in the second quarter despite elevated interest rates and home prices, according to TransUnion’s Q2 2025 Credit Industry Insights Report.

Originations rose 5.1% year over year, driven largely by a rebound in refinancing.

Rate-and-term refinances climbed 44% and cash-out refinances increased 15%. Home equity originations posted their strongest annual growth since 2022, rising 12%. Gen X and baby boomers accounted for most of the home equity activity.

First-mortgage delinquencies edged higher, with the 60-day past-due rate reaching 1.27% in Q2 2025, near pre-pandemic levels.

Federal Housing Administration (FHA) loans represented 35% of these delinquencies. The Q2 2024 vintage of new mortgages is performing better than the Q2 2023 group, the report noted, although it’s still below that of prior years.

“Amid ongoing uncertainty surrounding tariffs and broader economic policy, the Federal Reserve has maintained a steady interest rate stance in 2025,” said Satyan Merchant, senior vice president of auto and mortgage at TransUnion. “Some forecasts anticipate a potential rate cut in the second half of 2025, which would likely lead to a decline in mortgage rates.

“If paired with housing inventory returning to pre-pandemic levels, this could stimulate increased mortgage origination activity.”

The report also found that credit card originations increased 4.5% year over year to 18.5 million, marking the first annual growth since 2022. Gains were seen across the credit spectrum, with super prime borrowers up 5% and subprime borrowers up 15.2%.

Balances rose 4.5% annually in Q2 2025 — below the 10-year average of 5.8% and well below the double-digit growth rates of 2022 and 2023. Delinquencies improved, with the 90-day past-due rate falling to 2.17%.

“In Q2 2025, the bankcard market showed a healthy balance of growth, stability, and recovery,” said Paul Siegfried, senior vice president and credit card business leader at TransUnion. “Following six consecutive quarters of year-over-year declines, originations have now grown for two straight quarters — signaling renewed momentum. Seasonal growth is expected to continue into the next quarter.

Unsecured personal loan originations climbed 18% year over year to 5.4 million accounts. Both the super prime and subprime segments contributed — with nearly 20% growth among super prime borrowers and roughly 23% among subprime.

Total balances reached a record $257 billion in Q2 2025, up 4% from one year earlier. Delinquency rates improved slightly, with the 60-day past due rate declining to 3.37%. Subprime delinquencies dropped from 14.4% to 13.6%.

“Lenders are driving growth through refined risk assessment and targeted acquisition strategies, despite ongoing uncertainty from trade policies and federal student loan repayment pressures,” said Josh Turnbull, senior vice president and consumer lending business leader at TransUnion.

“Improving delinquency rates among subprime borrowers signals effective risk management and broader economic stability, reinforcing lender confidence in this segment.”

TransUnion said data points to steady and disciplined credit use even amid economic challenges. Credit card balances and unsecured personal loan balances are growing at a slower pace than in recent years, while delinquency rates are declining.

“We’re increasingly seeing the credit card lending market return to pre-pandemic patterns,” said Jason Laky, executive vice president and head of financial services at TransUnion.