N.Y. Fed flags rising auto financing delinquencies

on May19

The New York Federal Reserve says 7.35 percent of automotive balances — loans and leases combined — became at least 30 days delinquent in the first quarter.

The New York Federal Reserve today called out what it termed a “significant” upward trend in the last few years in the rate at which auto loans and leases combined are entering delinquency, although the numbers are still below pre-recession highs and nowhere near as high as they were in 2008, 2009 and 2010.

“While most delinquency flows have improved markedly since the Great Recession and remain low overall, there are divergent trends among debt types,” said Donghoon Lee, research officer at the New York Fed.

‘Trending upwards’

“Auto loan and credit card delinquency flows are now trending upwards, and those for student loans remain stubbornly high,” he said in a blog that accompanied the New York Fed’s “Quarterly Report on Household Debt and Credit” for the first quarter of 2017.

In contrast, mortgage delinquencies are trending lower.

The New York Fed added new delinquency charts to today’s public report. The “flow” charts measure the rate at which balances transition into delinquency by comparing balances that have newly become delinquent vs. balances that were current in the previous quarter.

For example, 7.35 percent of automotive balances, loans and leases combined, became at least 30 days delinquent in the first quarter compared with the fourth quarter of last year. That rate was 7.27 percent in the first quarter of 2016, the New York Fed said.

Tighter standards

Meanwhile, the report showed some evidence of tighter approval standards for subprime originations and those at the low end of prime.

The report said originations to customers with credit scores below 620 decreased to $25.9 billion in the first quarter from $26.9 billion a year ago. Originations for 620-to-659 credit scores also declined. Originations for higher credit tiers all increased.



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