Treasury Yields Move Higher as Investors Assess State of U.S. Economy

• US unsecured loan balances reached a record high in 2025, rising 10.0% to US$276.0Bn, driven primarily by strong demand from subprime borrowers, according to TransUnion’s Credit Industry Insights Report.
• Borrower participation increased meaningfully, with 26.4Mn consumers holding unsecured loans as of end-December, up from 24.5Mn a year earlier, reflecting expanding reliance on non-collateralised credit.
• Debt consolidation and cost-of-living pressures are key drivers. As interest rates began to ease, many consumers used unsecured loans to refinance credit-card balances, while lower-income households increasingly relied on these products to manage elevated living costs amid weak wage growth.
• Credit-card exposure continues to expand but with tighter risk controls. Total credit-card balances rose 4.0% to US$1.15Tn, though issuers reduced initial credit limits to mitigate risk as lending to lower-income borrowers increased. Delinquencies have also been gradually trending upward.
• Credit growth is expected to normalise in 2026. TransUnion forecasts a 5.7% increase in new unsecured loan originations, signalling a moderation from the stronger post-pandemic volatility in consumer credit demand.
• Mortgage and refinancing activity should improve modestly, with new mortgages projected to grow 4.0% and refinancings up 4.2%, supported by borrowers gaining access to lower rates relative to recent mortgage vintages.

(Source: Reuters)