We have a long way to go before our economy is back to normal, but there are increasingly hopeful signs on the horizon. Personal loan originations point toward that hope, which are projected to surpass 2019 levels in 2022, according to a recent report from TransUnion. Here’s the scoop.

What Is a Personal Loan Origination?

“Origination” refers to the process of taking out a new loan. With that said, personal loan originations refer to the number of personal loans taken out, not the number of people who took out personal loans. For example, if someone took out two personal loans in a year, that would result in two loan originations. Further, according to TransUnion, there were 18.8 million personal loan originations in 2019. In other words, 18.8 million personal loans were taken out during that year.

Personal Loan Originations Over the Years

The number of personal loans is one aspect economists look at when measuring the economy’s health. If the economy is running smoothly, you’ll usually see a steady amount of personal loan originations, or even an increase. However, if the economy is struggling, the number of personal loan originations typically decreases.

According to TransUnion, here’s a look at personal loan originations since 2019.

The number of personal loan originations took a sharp nosedive in 2020 when the pandemic first started. Lenders weren’t too sure about people’s prospects to repay their personal loans given the tough economic conditions, and so they tightened their qualification requirements.

Now that economic conditions are improving, TransUnion predicts the number of personal loan originations in 2022 will increase. This is good news for people who may need to take out a personal loan.

Prime vs. Nonprime Borrowers

Although TransUnion is predicting more personal loan originations over the upcoming year, some groups are projected to benefit more than others. Personal loan originations are expected to increase 14% among prime borrowers in 2022 compared to the year before, while they’ll increase slightly less—only by 11%—among nonprime borrowers.

According to the Consumer Financial Protection Bureau (CFPB), prime borrowers are people with credit scores between 660 and 719. Nonprime borrowers have credit scores ranging from 580 to 659.

It’s important to note that TransUnion’s study only provides projections, not precise numbers. If Covid-19 continues to disrupt the economy, a new variant pops up or any other unexpected events happen—and recent years have told us that this is a possibility—then these projections may prove inaccurate.

If you find yourself with a nonprime credit score and you’re worried that someone with a prime credit score has an unfair advantage, don’t be. The difference between 11% and 14% is meager, and when the dust settles, it may wash out anyway.

Personal Loan Originations vs. Other Credit Products

Personal loans are handy to consider because of their wide range of uses. But they’re not the only type of credit account that might interest you as a consumer, and that’s why economists look at other loans, too.

Here are TransUnion’s 2022 auto loan and credit card predictions.

Auto Loans

Since the pandemic started, auto loan originations haven’t dipped quite as much as personal loans. TransUnion anticipates a rise in auto loan originations going forward into 2022, driven partly by more lending to subprime borrowers.

Credit Cards

Credit card originations have gone on an interesting journey. Lenders clamped down on how many new credit cards they issued during the first year of the pandemic (2020). But by 2021, they’d revved the engine back up with credit card originations going higher than just before the pandemic started.

While the number of credit card originations has gone up, credit card balances (i.e., how much people owe on their cards) are expected to increase as well. Specifically, TransUnion predicts that more people will be swiping their cards in the first quarter of 2022, leading to higher balances. After that, they predict that credit card balances over the next three quarters will remain relatively stable.

Here’s a glance at credit card originations over the years, and what’s to possibly come in 2022.

How Will Personal Loans Continue to Change Moving Forward?

Lenders are “eager to grow,” according to Liz Pagel, senior vice president and consumer lending business leader at TransUnion, and that means increasing loan originations. As we’ve seen, that includes applicants who, for the past few years, haven’t been quite as able to get loans.

Some of these increases in debt will fuel each other. For example, as credit card balances rise in 2022, TransUnion predicts that there will be more personal loan originations given out as debt consolidation loans to combine all of this higher-interest debt.

Another question mark on the horizon is where the federal funds rate will go, which has a big impact on how much it costs to take out a personal loan. Currently, the effective federal funds rate is near zero, but projections anticipate that it’ll rise in 2022. This may make personal loans more expensive, and that could deter some people from taking them out.

Only time will tell what the future holds, and given all of the uncertainty in the world, it’s a good reminder that predictions aren’t 100% true until it happens.