NEW YORK — The Federal Reserve Bank of New York’s Center for Microeconomic Data's “Quarterly Report on Household Debt and Credit” shows continued growth for the auto finance market amid concerns over increased lending to car buyers in the subprime credit tiers and an increasingly high 90-day delinquency rate.
Analysts said the aggregate U.S. household debt balance grew to $13.54 trillion in the fourth quarter of 2018. That’s a 0.2% increase from Q3 and 6.9% more than consumers owed when the Fed’s chart hit its last peak of $12.68 trillion in Q3 2008. About 195,000 U.S. consumers filed for bankruptcy in Q4, down from 200,000 in Q3. Aggregate credit card limits rose 1.5% for a 24th consecutive quarterly increase.
Auto originations totaled $144 billion in Q4 and $584 billion for the year, making 2018 auto finance’s biggest year since the Fed began tracking the metric 19 years ago. New mortgages, including refinanced mortgages, totaled $401 billion for the quarter, falling to a nearly four-year low.
Analysts noted that a “substantial” share (31%) of new auto loans were extended to borrowers with credit scores under 660 compared with only 10% of home loans. Also worrisome is the 90-day delinquency rate, which now accounts for 7 million U.S. car buyers.
“As of Dec. 31, 4.7% of outstanding debt was in some stage of delinquency, unchanged from the third quarter,” the report states, in part. “Of the $630 billion of debt that is delinquent, $416 billion is seriously delinquent (at least 90 days late or ‘severely derogatory’). The flow into 90-plus day delinquency for credit card balances has been rising since 2017, while the flow into 90-plus day delinquency for auto loan balances has been slowly trending upward since 2012.”
To read the complete report, click here.