Subprime Borrowing Surge Pushes US Personal Loan Balances to Record Highs
Chicago, Thursday, 19 February 2026.
Unsecured personal loan balances jumped 10 percent to a record $276 billion, fueled by a massive 32.5 percent surge in subprime originations, signaling shifting consumer credit risks.
Record Balances Driven by High-Risk Borrowers
According to data released today, Thursday, February 19, 2026, by TransUnion, the landscape of American consumer credit is undergoing a significant shift toward higher-risk borrowing. Unsecured personal loan balances in the United States have climbed to an unprecedented $276 billion, marking a 10 percent increase over the previous year [1][3]. This growth is not evenly distributed across the credit spectrum; rather, it is being propelled by a dramatic rise in activity among subprime borrowers. In the third quarter of 2025 alone, subprime personal loan originations surged by 32.5 percent year-over-year, indicating that consumers with lower credit scores are increasingly turning to unsecured lending products to manage their financial obligations [3]. The total number of consumers holding these loans has expanded from 24.5 million to 26.4 million, a rise of approximately 7.755 percent, suggesting a broadening reliance on this form of credit [1].
Delinquency Trends and Consolidation
As borrowing expands, so do the indicators of financial stress within the unsecured lending market. The delinquency rate for unsecured personal loans—specifically those 60 or more days past due—reached 3.99 percent in the fourth quarter of 2025 [2][3]. This uptick in delinquencies accompanies a broader trend of debt consolidation. Michele Raneri, vice president and head of U.S. research and consulting at TransUnion, noted that as interest rates began to decline, consumers started consolidating credit card balances into unsecured loans [1]. This behavior is contextualized by the state of the credit card market, where total balances grew by 4.2 percent to $1.15 trillion in 2025, with serious delinquencies (90+ days past due) rising to 2.58 percent [2][3]. The data suggests that while consolidation offers a lifeline, the underlying credit health of the subprime segment remains fragile.
2026 Forecast: Growth Amidst Tightening Auto Credit
Looking ahead, TransUnion’s forecast for 2026 projects continued momentum for unsecured personal loans, with originations expected to grow by 11.2 percent [2][3]. This bullish outlook for personal lending contrasts sharply with the automotive sector. Auto loan originations are projected to contract by 1.5 percent in 2026 [2][3]. The automotive market is currently grappling with affordability issues; in the fourth quarter of 2025, the average amount financed for a new vehicle was $44,495, pushing the average monthly payment to $782 [2][3]. Satyan Merchant, a senior vice president at TransUnion, highlighted that rising vehicle prices are shifting new loan originations toward super-prime consumers, leaving many others priced out of the market [2]. Consequently, while the personal loan market expands to accommodate subprime demand, the auto loan market is tightening around the most creditworthy borrowers.
Housing Market Resilience and Lender Strategy
In the housing sector, the outlook for 2026 appears moderately positive, driven by an expectation of easing interest rates. Mortgage purchase originations are forecast to increase by 4.0 percent, while refinance originations are expected to grow by 4.2 percent [2][5]. This recovery follows a period of high rates that had stifled activity. Despite these growth pockets, financial institutions are adopting a cautious stance. Jason Laky, executive vice president at TransUnion, emphasized that lenders are taking a “disciplined approach to profitable growth,” utilizing advanced data to better manage risk and fraud in this evolving economic environment [2][3]. As the market navigates 2026, the divergence between booming unsecured lending and contracting auto credit will likely define the risk landscape for American lenders.