2025 Closes as the Strongest Year on Record; December Defies Seasonal Weakness

dv01’s latest Consumer Unsecured performance report shows December delivering broad-based outperformance versus seasonal norms—reinforcing that October’s weakness was shutdown-driven and transitory. Despite December being historically the most challenging month of the year, downstream loss outcomes continued to improve, with charge-offs falling below pre-COVID levels for the first time since mid-2022.

What the Data Shows: Record-Year Performance Holds Through December

• Seasonality defied: December is typically the weakest month of the year, yet all key performance metrics materially outperformed seasonally adjusted expectations—marking the strongest relative performance since early 2025.

• Impairments remained controlled: 30+ Impairments rose just 3 bps MoM, roughly 4x better than typical December deterioration, supported by continued strength in cure and Made Payment behavior.

• Losses continued to improve: Charge-offs increased modestly (+0.2 CDR to 7.3), still ~3x better than seasonal trends, and declined below December 2019 levels for the first time since mid-2022.

What We’re Watching: Vintage and Seasoning Signals

• Early seasoning showed rare improvement: Impairments among 6–12 month loans declined in December for the first time in seven months—an uncommon break from recent trends that suggests tentative stabilization in early vintage performance.

• Vintage divergence remains the focal point: The 2024-Q4 vintage continues to run hotter on impairments—particularly on a current-balance basis—while charge-offs remain far more anchored, consistent with strong curing behavior.

• Return dispersion remains structural, not credit-driven: Pricing pressure pushing higher-quality loan GWACs lower, higher pricing on lower-quality originations, and faster prepayments among higher-quality borrowers continue to drive ROI divergence across cohorts.