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The Dog Didn’t Bark: Delinquencies Stay Chill | Epic Research

Written by Jim Stewart Ben Brake | Mar 7, 2026, 5:00:00 AM

Three Things We’re Hearing

  • The Dog Didn’t Bark: Delinquencies Stay Chill
  • Groceries on Layaway: The New Normal?
  • 2025: The Year Home Equity Woke Up

A four-minute read

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The Dog Didn’t Bark: Delinquencies Stay Chill

  • As credit card balances reached a record high of over $1.3 trillion, card delinquency ended 2025 slightly lower than in Q4 2024
  • While delinquency has leveled at a higher rate than the years before Covid, it remains well below the levels established prior to the Great Financial Crisis (GFC)
  • Despite record high card balances, household leverage (debt as % of household income) has remained relatively low
  • Peak real leverage (≈1.35x DPI) occurred in 2008, driven primarily by mortgage debt
  • Long-term structural deleveraging followed the GFC in 2010–2019
  • The surge in pandemic-era income drove leverage to modern lows
  • 2023–2025 shows only modest re-leveraging
  • Today’s leverage (~0.91–0.92x real DPI) remains materially below pre-GFC levels, which would portend a continued favorable credit environment

Groceries on Layaway: The New Normal?

  • Buy Now, Pay Later (BNPL) has officially shed its reputation as a niche tool for millennials and, according to recent data, the sector has permanently morphed into a high-stakes "budgetary lifeline" for cash-strapped consumers, a transition coming with a heavy side of borrower’s remorse
  • The sheer scale of the BNPL market is staggering — a February 2026 report projects the U.S. market is scaling at a 21.3% CAGR, aiming for nearly $145.7 billion by 2033 — growth that isn't just coming from retail with providers aggressively pushing into healthcare and travel & leisure
  • Perhaps the most telling sign of BNPL’s new role is its presence at the checkout counter for essentials, with a 2025 LendingTree survey revealing a staggering 25% of BNPL users rely on the service for groceries — a massive jump from just 14% the prior year
  • Furthermore, according to the same study, 33% of users now view BNPL as a necessary "bridge" to their next paycheck, with what was once a convenience for discretionary purchases becoming a core cash-flow tool
  • The rapid adoption of BNPL appears to be outpacing consumer management skills, with the study finding that 41% of BNPL users admitted in 2025 to making at least one late payment in the past year
  • This fragmentation is leading to a wave of "BNPL Regret" as evidenced in a February 20, 2026 survey by The Motley Fool that found:
  • 26% of users deeply regret using the service
  • 19% admit to completely losing track of their upcoming payment schedules
  • With many consumers having multiple BNPL loans, a lending opportunity emerges to offer "BNPL debt rollup" products consumers are desperate for — lenders who can provide a single, consolidated dashboard to manage these disparate obligations might find a willing market

2025: The Year Home Equity Marketing Woke Up

  • After several muted years, HELOC and Home Equity Loan marketing spend came roaring back in 2025, with mail volume +54% YOY from 2024 to 2025
  • While the past several years have seen record levels of tappable home equity
  • And now amid a wave of product innovation, and increased customer interest, lenders are finally ramping up marketing investment in direct mail as well as online channels
  • Citizens and Figure maintained their spots among the top mailers, and with major player Discover/Capital One exiting the HELOC market in July, newer entrants such as Aven and Point have stepped up aggressively, increasing direct mail investment and reshaping the competitive landscape
  • In 2025, Aven took a leading share of HELOC mail volume, propelled by its differentiated credit card–HELOC hybrid product
  • Aven’s messaging strategy highlights rates that are often lower than traditional credit cards, while their creative leans into credit card familiarity, with direct mail packages frequently including faux card inserts, clear payment comparison charts, references to traditional card benefits like 2-3% cashback, and straightforward rate messaging to drive response
  • Point also increased 2025 mail volume, advertising the non-traditional terms of their Home Equity Investment (HEI) that comes with no monthly payments, with costs deferred until time of home sale or to the end of the term, and with creatives that stand out with educational messaging and an eye-catching check-style buckslip
  • Digital marketing HELOC/HE investment has also increased year over year, up 44% vs 2024
  • As an example, Aven ramped up paid social spend 38% YoY in 2025 ($2.6 million and $3.6 million respectively) with digital messaging highlighting the unique aspect of their differentiated product
  • In online videos, Aven focuses more on the testimonial style promotion, leaning into how you can use the Aven card similarly to a typical credit card
  • When not focusing on the testimonials, Aven digital advertising promotes bold messaging that they can “beat any HELOC rate guaranteed”, 2-3% cashback, and trust-building messaging to drive engagement
  • The Federal Reserve is moving to slash capital requirements for bank mortgage activities after years of watching borrowers flee to non-bank competitors
  • Fed Vice Chair Michelle Bowman announced two key changes: eliminating deductions for mortgage servicing rights from regulatory capital and potentially scrapping the punitive 250% risk weighting on these assets
  • Banks' share of mortgage origination has cratered from 60% in 2008 to just 35% in 2023, with non-bank specialists like Rocket Mortgage filling the void
  • J.P. Morgan Chase is reportedly planning a 160-location wave of branch openings this year
  • The move is part of a larger push by American lenders to address consumers’ desire for in-person banking and part of a 2024 pledge by the country’s largest bank to open upwards of 500 branches in three years
  • J.P. Morgan’s Chase consumer banking brand has branches in every state within the continental U.S., and is expanding to help reach its goal of having 15% of the country’s retail deposits
  • In late February 2026, credit card stocks such as Capital One and American Express sold off sharply after a viral Citrini Research report raised concerns about “Agentic AI”
  • Investors fear autonomous AI systems could disrupt traditional payment models by bypassing card networks like Visa and Mastercard in favor of stablecoins or direct bank transfers, avoiding 2–3% interchange fees
  • Broader macro concerns also weighed on the sector, including the possibility of an AI-driven recession leading to widespread white-collar job losses, higher unemployment and reduced discretionary spending
  • Some analysts argue the sell-off is overdone, noting that card issuers maintain strong competitive advantages, including fraud protection, rewards programs, and established consumer ecosystems that make widespread displacement less likely

Thank you for reading.

Jim Stewart and Ben Brake
www.epicresearch.net

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