Published on July 30, 2021 by BankBeat

Consumer credit applications, including for mortgages, car loans and credit cards, have mainly returned to pre-pandemic levels, according to a report from the Consumer Financial Protection Bureau.

New mortgage applications saw an initial decrease but were still above usual levels by May 2020 and remained so 12 months later. 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 drastically early in the pandemic, dropping 52 percent over the month of March 2020, compared to a typical 1 percent drop in previous years. Providers recovered most of that initial drop by June 2020.

Credit card inquiries also saw a large drop early in the pandemic and stayed lower for much longer, remaining 30 percent below pre-pandemic levels in September 2020. Typically, these inquiries spike in the holiday season but remained below normal numbers in the last weeks of 2020. Those numbers had recovered by spring and stayed at usual levels between March and May, indicating the recovery was unlikely to be only a response to the March stimulus payments, the report found.

Despite those recovery trends, customers with deep subprime and subprime scores still have not recovered to pre-pandemic levels, likely partially due to tightening credit, according to the report. At the same time, auto loan and credit card applications of customers with super prime scores also did not fully recover to their pre-pandemic level, likely due to depressed demand for those types of credit among these consumers.

Mortgage and auto loan application recoveries also widely varied across geographic regions, while the rebound in credit card applications was more geographically uniform across the country.

Idaho Bankers Association President & CEO Trent Wright said that growth in credit requests is evident in Idaho, a state with a booming economy and growing population of people from Texas, California and Washington. Census numbers from last year revealed Idaho had narrowly missed taking the No. 1 Census spot for state population growth over the last decade — 17.3 percent, far higher than the U.S. average of 7.4 percent. He attributes the state’s growth to its quality of life, relatively low tax rates and regulations and strong business community.

“Everybody here is incredibly busy,” Wright said of bankers.

Tennessee Bankers Association President Colin Barrett said credit situations vary depending on location and type. Some banks have reportedly seen strong commercial and housing demand after capital was accumulated during the pandemic.