Recap: dv01 Discussion: Consumer Credit Market Pulse – August 2026

dv01’s latest roundtable discussion brought together perspectives across research, capital markets, and lending, with a shared goal of understanding where performance is stabilizing, where stress is emerging, and how borrower behavior is shifting in today’s rate environment.

dv01 Chief Economist Vadim Verkhoglyad moderated, joined by: 

• John Goldston, Vice President, Finance and Capital Markets, Prosper
• John Hecht, Managing Director, Equity Research and Specialty Finance, Jefferies
• Harry Kohl, Senior Director, ABS North America, Fitch Ratings
• Phil Marlles, High Yield Desk Analyst, Jefferies
• Kunal Shah, Vice President, Capital Markets Execution, Upgrade

Macro Conditions: Consumers remain resilient; are borrowing more selectively 

US households continue to weather higher energy prices and lingering inflation. Neither the Iran oil price shock nor the One Big Beautiful Bill produced statistically significant changes across income bands, as shown by the Federal Reserve’s Distributional Financial Accounts. In fact, low- and middle-income borrowers appear to save more as a result, with Q2-2026 credit card growth some of the slowest in the past decade outside COVID.

With credit card balances near all-time highs, consumers are choosing to consolidate higher APR revolving balances into more attractive unsecured personal loans. In addition, relatively stable employment has left consumers outside lower-income households comfortable enough to modestly re-leverage.

Credit Performance: Overall strength despite weakness in certain asset classes

Consumer credit performance remains strong in aggregate, though trends are diverging across asset classes: 

• Consumer Unsecured performance is strong, partly because the unsecured personal loan borrower base spans the income and credit spectrum.
• Subprime Auto performance is weaker, as loans are concentrated among borrowers disproportionately affected by the K-shaped economy:
  • Eroding real incomes and falling savings rates are weakening the ability to service debt
  • Performance also varies by collateral and vintage, as some borrowers may be struggling to service older loans on vehicles with negative equity

Originations: Record volumes, but underwriting stays disciplined

As reported in dv01’s June Consumer Unsecured Originations Report, originations crossed the $7 billion for the first time. This comes as fintech lenders increase market share, growing to nearly half of net new unsecured personal loan originations.

This growth comes as result of a stronger funding base and more disciplined lending:

• Private credit forward flows now give issuers more reliable financing over time
• Combined with ABS markets, the additional liquidity enables higher targets for origination flows
• Issuers are reducing volatility in portfolio performance by lending more to prime and above-prime—as well as repeat—customers
• Funding costs for issuers have decreased 30 to 100 bps YoY, improving economics even as spreads tighten 

AI: Efficiency Today, Structural Changes in the Medium-Term 

While the sector already uses machine learning, the advent of LLMs looks to be enabling structural changes in consumer lending. In the near-term, AI opens up efficiency improvements, especially for analyzing large data sets. 

In the medium-to-long run, AI has to potential to:

• Enable more granular detail in underwriting by parsing data outside traditional attributes 
• Decrease the risk of near-prime, subprime, and thin-file lending
• Allow AI agents to compare and apply for credit on behalf of consumers 
• Improve issuer capabilities to proactively offer credit when borrowers need it

What Market Participants Should Take Away

Across issuers, investors, and capital markets participants, several themes stand out:

• Performance dispersion is widening. Portfolio-level metrics increasingly mask meaningful variation by vintage and collateral type
• Record originations reflect market changes, not increased risk. The surge in Consumer Unsecured originations reflect a maturing fintech lending sector and market share gains from revolving credit, not loosening underwriting standards
• Funding mix diversification is accelerating, requiring better data and more detailed views of collateral quality
• Loan-level transparency and infrastructure now determine speed, accuracy, and competitiveness, particularly as reporting demands intensify

The Consumer Credit Market is Moving Fast. dv01 Moves With It.

dv01 supports clients’ investment analysis with the loan-level data needed to spot consumer credit trends as they emerge. Market Surveillance provides access to one of the largest, most comprehensive Consumer ABS and RMBS datasets in the market—allowing investors to analyze trends at the loan, cohort, and market level and benchmark performance across vintages and issuers. 

Through Data Direct, dv01’s AI-ready data can be accessed via Snowflake, BigQuery, and other cloud-sharing methods, creating a trusted foundation for AI and machine learning applications.

Contact us to discuss how dv01 can improve your data infrastructure.