Even as the cycle extends, some credit metrics improve

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Buy now pay later slowing but still disrupting

Rising card delinquency rates, particularly among lower income consumers, are one of several pieces of data that have led some to take a negative view of the US consumer. But Mihir suggests delinquency rates have started to decline recently and discusses why that's been the case. Ultimately, employment is a key driver for consumer credit and we'd be more concerned if the outlook for jobs deteriorated more rapidly. "Buy Now/Pay Later" or BNPL has enjoyed rapid growth in recent years, particularly among younger consumers, but a combination of higher rates and a weaker consumer has stalled growth. Mihir believes that BNPL is most challenging for the traditional private label card issuer market (e.g. department store cards), and will continue to gain market share. Mihir also discusses the mortgage insurance sector which has less credit risk than in the past given today's higher underwriting standards and because of the equity that many homeowners now have, owing to home price appreciation.

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