Hong Kong Consumer Credit Diverged by Product in Q2 Amid Uneven Demand

• New credit card activity contracted significantly amid weaker demand and lender pullback, although subprime borrower share edged higher off a low base

• Revolving line originations decreased significantly, with market share shifting away from digital banks amid increasing delinquencies

• Mortgage market expanded as property affordability improved, supported by modest balance growth in the context of favourable policy measures  

Insights from TransUnion’s (NYSE: TRU) Hong Kong Industry Insights Report for Q2 2025¹ show that the credit market experienced growth in personal loans and mortgage originations during the quarter, while credit card and revolving line activities declined significantly. These declines in new consumption-led products were likely driven by consistently elevated unemployment across the population, especially among younger consumers², while older cohorts appeared to shift their focus towards maintaining larger property loans.

Credit card originations during Q1 2025 declined by 17.9% year-over-year (YoY) while enquiries fell by 2.5%³. This signalled weaker demand and, more importantly, increased lender caution towards new card acquisitions. Due to lower originations, total open credit card accounts at the end of Q2 2025 fell 1.5% YoY.

From a borrower risk perspective, new card originations by subprime⁴ consumers rose 9.9% YoY, albeit from a low base and primarily driven by money lenders. All other risk tiers recorded double-digit decreases. A similar trend was observed in the existing credit portfolio, where the volume of cards held by subprime borrowers increased by 8.7% YoY – an unusual scenario in this typically risk-averse market.

“The growth in subprime cardholders may be an indication that lenders are seeing fewer high-quality prospects in the market,” said Weihan Sun, principal of research and consulting for Asia Pacific at TransUnion. “It might also reflect a shrinking pool of borrowers who meet the appetite of traditional lenders, which may warrant attention. At the same time, high credit card ownership among prime plus and super prime segments is further constraining growth opportunities for lenders.”

With growth opportunities narrowing among prime segments, attention is shifting to subprime borrowers. Delinquencies, measured as the percentage of accounts with 90 or more days past due (DPD), remained steadily low at 0.03%. However, the continued growth in new subprime accounts is worth closer monitoring, as these are more likely to carry higher risk of delinquencies in the future.

Delving more deeply into the slowdown in credit card growth, originations among Gen Z consumers⁵ declined by 1% YoY, with only money lenders showing YoY card growth among issuer types. This slowed new card activity among younger consumers was likely, in part, due to youth unemployment having reached a high of 6.8% in Q2 2025² – the highest since December 2022 – as recent graduates entered a saturated job market.

“Elevated youth unemployment is a leading indicator for what lenders can expect of credit market growth activity over the next six to 12 months,” Sun said. “Lenders should revisit their originations strategies in the coming months and identify growth opportunities among the younger generation, given the reduced participation and demand from Gen Z borrowers.”

Revolving lines growth slowed

Following significant growth during 2024, revolving line originations declined by 17.8% YoY in Q1 2025, signalling waning demand, likely brought about by subdued lender campaign activity due to climbing delinquencies. Account-level delinquencies (60+ DPD) were up 14 basis points (bps) YoY to 0.51%, while consumer-level delinquencies over the same period increased 26 bps to 1.06%.

Revolving lines are particularly popular among younger consumers because of their convenience, with quicker applications that enable immediate liquidity, and typically have smaller ticket sizes. Given the product concentration among younger borrowers, Hong Kong’s current youth unemployment situation has likely been a driver of slower growth in revolving lines.

This pullback has impacted the share of accounts issued by digital banks, who have been successful in attracting younger consumers in recent years. Originations by digital banks fell by 45.4% YoY in Q1 2025. Meanwhile, money lenders capitalised on opportunities for integration into e-wallets on online retail platforms, resulting in 44.4% YoY originations growth and reflecting a significant share shift in the second quarter.

In contrast, traditional banks, which do not participate significantly in this product, saw a 34.5% YoY growth in originations off a low base while targeting lower-risk, higher-ticket borrowers: digital banks’ typical revolving lines were between HK$5,000 and HK$8,000, while those offered by traditional banks are usually approximately HK$200,000.

“Revolving line growth by traditional banks is largely driven by consumers seeking flexible liquidity for unforeseen needs. These higher-value loans are typically opened with traditional banks that are more willing to extend larger credit limits. While consumers may not draw down on these loans immediately, they value having access for emergencies or investment opportunities,” Sun said. “Lenders looking to expand in this space should align risk-based pricing with their appetite and strengthen account management using data-driven early warning indicators. A comprehensive toolset that quickly surfaces shifts in risk and opportunity can support better acquisition strategies and inform decisions across credit limits, interest rates and payment terms.”

Mortgage market grew, reflecting increased consumer confidence

The slowdown in consumption-led credit originations for credit cards and revolving lines may be partly attributed to Hong Kong residents responding to policy changes that encourage property sales, such as stamp duty cuts, reduced transaction costs⁶, and the availability of fixed-rate mortgages. These incentives have prompted consumers to redirect their disposable income toward servicing mortgages or to home improvements.

In Q2 2025, mortgage origination volumes increased by 4.6% YoY, while the number of accounts increased by 3.3%, according to the Hong Kong Monetary Authority (HKMA)⁷. However, the average value of new mortgages declined by 9.5%, and total outstanding balances increased by just under 1%.

With thousands of new flats, many attractively priced, expected to be available during 2025, increased activity in the region’s property market is likely to improve consumer confidence.

Modest gains in personal loans

Personal loan originations grew by 2.1% YoY in Q1 2025 as lenders met increasing demand, with total account volumes and outstanding balances showing modest gains of 1.2% and 0.9% YoY, respectively. Among all personal loan accounts, subprime volume increased by 7.8%, likely suggesting greater appetite among higher-risk consumers seeking liquidity or aiming to diversify their wallets.

While lenders are taking on more risk by expanding access to personal loans, their strategy of offering lower value loans (average new loan value decreased by 2.0% YoY in Q1 2025) has contributed to improved delinquency performance: 60+ DPD account-level delinquencies fell by four bps to 0.84%, while consumer-level delinquencies over the same period improved by seven bps to 0.98%. This marks the third consecutive quarter of improvement, reinforcing lender confidence in further expansion.

“Lenders seeking to unlock more value among consumers who hold a single credit product should focus on deepening engagement through retention strategies and targeted cross-selling campaigns,” said Sun. “By embedding early default detection and monitoring tools into underwriting processes, lenders can proactively manage risks and strengthen portfolio resilience, laying the foundation for sustainable growth in a more diverse credit landscape.”

Q2 2025 Metrics for Major Consumer Credit Products in Hong Kong

 i. Originations are viewed one quarter in arrears to account for reporting lag. 

ii. Serious-delinquency rates are 90 or more days past due for credit cards and 60 or more days past due for all other credit products. 

iii. Delinquency data are reported at an account-level up to 150 days past due, excludes 150+ days past due and charge-offs.

iv. Mortgage data sourced from the HKMA

1 TransUnion's second Industry Insights Report for Hong Kong in 2025 is based on data from the Credit Reference Platform under Credit Data Smart (CDS), following the full migration by the end of November 2024. Future reports will continue to leverage data from this source

2 Census and Statistics Department: Table 210-06103 : Unemployment rate and underemployment rate by age and sex

3 Originations and enquiries are viewed one quarter in arrears to account for reporting lag

4 TransUnion CreditVision® risk score: Subprime = JJ to II; Near prime = HH to DD; Prime = CC; Prime plus = BB; Super prime = AA

5 Generations are defined as follows: Gen Z, born 1995–2004; Millennials, born 1980–1994; Gen X, born 1965–1979; and Baby Boomers, born 1944–1964 

6 info.gov.hk: Government welcomes passage of Stamp Duty (Amendment) Bill 2025

7 According to the Hong Kong Monetary Authority releases on mortgage data from April to June 2025