TransUnion Study Finds Consumers Applying for a Mortgage Up to Three Times as Likely to Open New Credit Cards and Auto Loans

The study found that prime or better mortgage applicants on average are over 50% as likely to open a new credit card over the next 12 months following a mortgage inquiry compared to the overall population. These same consumers can be up to three times as likely to open a new auto loan in that same 12 month period.

Likelihood of Prime or Better Consumers with a Mortgage Inquiry

to Open the Following Accounts Over the Next 12 Months

	All Consumers	Consumers with a Mortgage Inquiry
% of Consumers Who Open a Credit Card	28%	43%
% of Consumers Who Open an Auto Loan	11%	22%

The study also found that average daily credit card originations for consumers who moved into new homes were 54% higher 30 days after paying off a mortgage compared to 30 days prior. Average daily auto originations were 84% higher in that same timeframe. Nearly identical credit card and auto origination trends were observed for consumers who refinanced an existing mortgage.

“Clearly consumers who are planning to move or refinance their mortgage wait until after that event to seek new credit—but once that new mortgage event occurs, their demand far outstrips the overall population. This information is particularly valuable for lenders who are seeking credit-active consumers with higher demand for new credit cards and auto loans; this population is much more likely to respond to new offers, making them an attractive segment that lenders can now identify,” added Becker.

Credit Card Spend Surprisingly Rises Prior to Mortgage Closing

According to TransUnion’s research, for existing mortgage borrowers who move or refinance, 71% of all mortgage inquiries occur between 30 and 90 days prior to existing mortgage payoff and new mortgage origination. In this timeframe, consumers who are preparing to originate a new mortgage change their credit card spending and balance behaviors.

Consumers significantly increase credit card spend—at a rate of two to three times—and begin building balances in the months prior to mortgage payoff and new mortgage originations, not after. Contrary to popular belief, the study also found that consumers increase credit card spending—up to three times higher than levels six months earlier—in the month prior to paying off their existing mortgages.

TransUnion Study Finds Consumers Applying for a Mortgage Up to Three Times as Likely to Open New Credit Cards and Auto Loans