Consumer credit applications, including mortgages, car loans and credit cards, have largely returned to pre-pandemic levels, according to a report from the Consumer Financial Protection Bureau.
New mortgage applications had an initial dip but were above usual levels by May 2020 and have remained so through May of 2021. Following that recovery, new mortgage inquiries showed the same seasonal patterns as in prior years,although they consistently exceeded their usual volume by 10 to 30 percent.
Auto loan applications fell dramatically early in the pandemic, dropping 52 percent over the month of March, compared to a typical 1 percent drop during that time pre-pandemic. They recovered most of their initial drop by June 2020 — 8 percent below early March numbers, compared to 5 percent lower pre-pandemic — and have been close to their usual level since early 2021. There was a notable spike in inquiries the week ending March 19, 2021, coinciding with the direct deposit of the American Rescue Plan Act stimulus payments starting on March 12.
Credit card inquiries also experienced a large drop early in the pandemic and stayed depressed for much longer, remaining 30 percent below pre-pandemic levels in September 2020. Typically, these inquiries spike in the holiday season at the end of the year, but remained below usual numbers in the last weeks of 2020. Nevertheless, they recovered by spring of 2021 and have stayed at their usual levels between March and May 2021, indicating that the recovery was unlikely to be only a response to the March stimulus payments, the report said.
Despite the overall trend towards a recovery, consumers with deep subprime and subprime scores still have not recovered to their pre-pandemic levels, likely in part due to a tightening of credit for these consumers, the report said. At the same time, the auto loan and credit card applications of consumers with super prime scores also did not fully recover to their pre-pandemic level, likely due to depressed demand for these types of credit among these consumers.
Mortgage and auto loan application recoveries also varied widely across geographic regions, while the rebound in credit card applications was more geographically uniform across the country.