CHICAGO—Many consumers feel their mortgage and auto payments are putting a strain on their household finances, and the prospect of falling interest rates has them ready to consider refinancing those loans, a new TransUnion study shows.
The data also show that credit unions (67%) are grabbing a much greater share of the auto refinancing activity than banks (20%).
“We surveyed consumers to better understand the drivers of refinance for both mortgages and auto loans,” said Jason Laky, executive vice president and head of financial services at TransUnion. “Millions of people financed homes and autos during this period of high interest rates, and many will look to refinance as interest rates decline.”
The surveys of current auto loan customers and those consumers who have taken out a mortgage in the last 24 months were conducted between Sept. 18 and Sept. 27. They resulted in responses from 1,002 and 1,025 auto and mortgage loan customers, respectively.
TransUnion’s survey found four in five homeowners say their mortgage payments are straining their finances and are looking to refinance their mortgage payments in the next 12 months.
Most Homeowners Say Their Current Mortgage Payment is a Strain on Their Personal Finances
| Opinions/Generation | All Consumers | Gen Z | Millennials | Gen X | Baby Boomers |
| Strongly Agree or Agree | 80.1% | 79.7% | 88.7% | 75.3% | 54.9% |
| Neither Agree nor Disagree | 8.0% | 10.6% | 4.6% | 9.8% | 12.1% |
| Disagree or Strongly Disagree | 11.9% | 9.7% | 6.7% | 14.9% | 33.0% |
Percent of Homeowners Who Anticipate Refinancing Their Mortgage
in the Next Twelve Months if Rates Fall
| Opinions/Generation | All Consumers | Gen Z | Millennials | Gen X | Baby Boomers |
| Very Likely or Likely |
80.0% | 77.0% | 89.6% | 78.5% | 46.2% |
| Neither Likely nor Unlikely | 7.1% | 10.2% | 4.2% | 7.3% | 13.2% |
| Unlikely or Very Unlikely | 12.9% | 12.8% | 6.2% | 14.2% | 40.6% |
Source: TransUnion U.S. consumer survey
When asked the biggest factor that would ultimately drive them to pull the trigger on a refinancing decision, 70% said that a more favorable loan term would be a key driver for them. However, a nearly identical percentage said that better interest rates (67%) and a cash-out refinance (61%) would also be significant drivers, reflecting broad economic interest.
“For many consumers, their mortgage payment is their largest single payment each month and the one that seemingly strains their budget the most,” said Satyan Merchant, senior vice president and mortgage and auto business leader for TransUnion. “The upside is that it is a payment that can be refinanced if the economic climate allows for it, and with interest rates at long last beginning to fall, consumers should begin exploring this option. Conversely, lenders should be actively marketing to these refinance candidates, regardless of what their primary motivation to refinance may be.”
Similar Consumer Sentiments Found When Asked About Auto Loans
The survey also examined consumer sentiment towards their existing auto loans, payments and interest rates along with future plans regarding refinancing. Results indicated that there was a similar eagerness to refinance when interest rates eventually fall, and a similar response among consumers when asked if they feel that their current auto loan payments represent a strain on their household finances.
When asked the extent to which they agree that their current auto loan payment represented a strain on their personal finances, 65% of respondents indicated that they agree or strongly agree with this statement as opposed to 20% who disagree or strongly disagree. Nearly the same percentage of respondents, 63%, indicated that they were likely or very likely to refinance their existing auto loans if it could save them money on their monthly payments; 52% of respondents indicated they would consider refinancing if it would save them between $50 and $149 monthly.
CUs Beating Banks
The research also explored the sentiment of consumers who have already refinanced despite the relatively high interest rates. Many of these borrowers derived lower payments through longer terms.
“From this standpoint, TransUnion data shows that credit unions continue to lead the way with 67% of the refinance share in 2023. Banks had the second largest share, at 20%. These figures have remained relatively stable in recent years and underscore consumers’ favorable perception of credit unions when they begin exploring refinancing opportunities,” TransUnion said.
“Credit unions may be able to offer their members rates and service that larger more traditional banks cannot,” said Sean Flynn, senior director of community financial institutions at TransUnion. “Credit unions should lean into this fact and leverage available tools such as trended data and advanced analytics to seek out those consumers who may be able to refinance.”