Total debt-to-income ratios have risen beyond prepandemic levels and the trend is particularly pronounced for nonprime in the current K-shaped economy, according to a new TransUnion study.
While DTIs are below caps in the 28/36 rule corresponding to some mortgage lenders' front- and back-end ratio limits, the increases — along with higher utilization and aggregate excess payments — point to borrower pressure outside post-pandemic normalization.
"This proved that we're not just back where we were, because the performance and all of these key metrics shows more stress on the lower end than in 2019," said Michele Raneri, vice president and head of research at TransUnion, in an interview with NMN in New York.
How front and back end ratios changed
Super prime borrowers had an average back-end DTI that was130 basis points higher on average than at the end of 2019 in the fourth quarter of last year. However, in comparison, near-prime DTIs were up 220 basis points at 21%. The subprime number rose by 210 basis points to 17.7%.
Front-end mortgage DTIs also have been higher. The average mortgage DTI for super prime borrowers jumped 181 basis points to 19.6% from 17.8%. Near prime ratios climbed 313 basis points from 20.1% to 23.3%. Subprime rose 368 basis points from 21.7% to 25.3%.
Transunion defines subprime as 549-600 on VantageScore 4.0's scale and refers to the 601-660 range as near prime. Borrowers with 781+ scores are considered super prime.
Consumer finance providers outside the mortgage industry also have been imposing more limits on credit lines to nonprime borrowers than super prime ones to manage risk.
"We're seeing an increase of consumers who are subprime and even deep subprime still getting new credit cards and new personal loans, but the amount that this has increased since 2019 is not keeping up with interest or inflation," Raneri said. (Deep subprime scores are below 549.)
"Super prime is keeping up better with inflation," she added.
Borrowers in the top credit tier saw an 11.5% increase in new bankcard credit lines between quarters in 2019 and 2025. Subprime borrowers experienced only a 7.1% increase. Those with "deep" subprime scores below 549 saw a gain of just 5.5%. Near prime's growth was only 5%.
Other mortgage takeaways
Within the mortgage industry, 60 days-plus delinquencies were still historically low in the fourth quarter of last year at 1.57%, but they've now crept upward for 16 consecutive quarters.
That said, Federal Housing Administration-insured loans accounted for the largest share of these arrears and government officials have said the increase in that sector stems partly from the temporary impact of a rule change.
Mortgage originations based on count jumped 12.8% to 1.39 million from a year earlier in the fourth quarter of last year, fueled largely by a 90% gain in rate-and-term refinancing and a 28% increase in cashouts. The Gen Z cohort experienced the biggest gain during the period at 27.3%
Home equity originations climbed 12.3% by count to 623,000, led by lines of credit. HELOCs rose 20% during the period to 322,000. Other types of home equity products inched up 5% to 301,000.
