Archive for the ‘Auto’ Category

Consumer Delinquencies Improve in 2Q

Posted on October 16, 2017 by Laura Lam

Delinquencies in closed-end loans held steady in the second quarter as bank card delinquencies fell and home-related categories continued their return to normal levels, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin. Overall, delinquencies fell in 8 of the 11 individual consumer loan categories.  The composite ratio, which tracks delinquencies in 8 closed-end installment loan categories, remained at 1.56% of all accounts – well below the 15-year average of 2.16%. “Delinquencies remain below historical levels as consumers continue to show great command of their finances,” said James Chessen, ABA’s chief economist. “The outlook remains very positive,…

Leasing Delinquencies Remain at Historic Lows

Posted on October 11, 2017 by Laura Lam

Recent statistics from the Federal Reserve validate what leasing professionals have understood about their industry for years. The data reach back to the first quarter of 1985 and underscore the fact that, when it comes to delinquencies and charge-offs, equipment leasing remains one of the best performing sectors under the broader umbrella of commercial finance. According to Bob Rinaldi, CEO of Commercial Industrial Finance, Inc., the most recent data on charge-offs and delinquencies offer no surprises. Rinaldi stated, “There’s nothing in this data that should alarm anyone in the industry…the data points are exactly where they should be. Everything here…

Banks Rebuilding Positive Image

Posted on October 10, 2017 by Laura Lam

The banking industry’s image with the American public has climbed to its highest point since the 2008 financial meltdown, with 43% now viewing it positively and 30% negatively. But Americans still view banking less positively than they did in the years leading up to the crisis, when it ranked above the average for other industries Gallup measures. The public’s net positive rating of banking — the percentage with a positive view minus the percentage with a negative view of it — slid from +32 in 2007 to -23 in 2009, and bottomed out at -28 in 2010 and 2012. This year’s…

Auto and Mortgage Loan Defaults at Lowest Level in Decade

Posted on August 29, 2017 by Laura Lam

Despite a slight increase in July, the default rate for first mortgage loans still sits at its lowest point in the last 10 years, according to the latest S&P/Experian Consumer Credit Default Indices.  In fact, the mortgage default rate for first and second mortgages aren’t too far off from their July 2016 level, as homebuyers get better at paying their mortgage on time. The indices represent a comprehensive measure of changes in consumer credit defaults and include bank card and auto loan default rates. As seen in the chart on the left, the first mortgage default rate increased two basis…

Banks Cut Back on Risky Lending

Posted on August 24, 2017 by Laura Lam

For the first time since 2012, lenders are making fewer subprime loans, according to a new report from TransUnion.  Subprime loans are those made to consumers with lower credit scores and usually carry less-favorable terms than prime loans. In most cases they carry higher interest rates and may have other disadvantages. The TransUnion report found 4.63 million consumers received a subprime auto loan or lease, personal loan, or credit card in the first quarter of this year. That compares to 4.89 million in the first quarter of 2016. “Across product lines, we saw a decline in subprime originations at the beginning…

Most Americans Die With Debt

Posted on August 04, 2017 by Laura Lam

You’re probably going to die with some debt to your name. In fact, 73% of consumers had outstanding debt when they were reported as dead, according to December 2016 data provided to Credit.com by credit bureau Experian. Those consumers carried an average total balance of $61,554, including mortgage debt. Without home loans, the average balance was $12,875. The data is based on Experian’s FileOne database, which includes 220 million consumers. Among the 73% of consumers who had debt when they died, about 68% had credit card balances. The next most common kind of debt was mortgage debt (37%), followed by…

Subprime Auto Defaults are Soaring

Posted on August 02, 2017 by Laura Lam

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud.  Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017.  A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide.  In July, 90-day auto loan delinquency rates eclipsed 3.8%, their highest levels since the financial crisis. Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great…

Consumer Delinquencies on the Rise

Posted on July 06, 2017 by Laura Lam

Delinquencies in both open- and closed-end loans rose in the first quarter of 2017, according to the ABA Consumer Credit Delinquency Bulletin released today.  The rise in closed-end delinquencies was driven by an uptick in late payments on auto loans, the report noted. The composite ratio, which tracks delinquencies in the closed-end installment loan categories, rose 5 basis points to 1.56% of all accounts, but remained well below the 15-year average of 2.17%. Delinquencies in indirect auto loans rose 8 basis points to 1.83% of all accounts, while direct auto lending delinquencies increased by 9 points to 1.03% of all accounts….

Is the New Household Debt Record Cause for Concern?

Posted on June 14, 2017 by Laura Lam

Last month, the New York Federal Reserve reported that household debt across the nation has hit a dubious milestone in the first quarter: It surpassed the peak debt level of 2008 at $12.7 trillion. Household debt — including mortgages, auto and student loans, and credit cards — rose $149 billion compared with the last quarter of 2016, with nearly all the gain coming from mortgages. Reaching the peak raises questions about whether the backdrop exists again for another financial meltdown.  But the data show the current structure of debt is substantially different from 2008. According to a research officer at…

Household Debt Hits New Record

Posted on May 23, 2017 by Laura Lam

Household debt is topping its 2008 peak prior to the housing crash. Total household debt has risen to $12.73 trillion in the first quarter, the Federal Reserve Bank of New York reported last week. However, Americans are handling their debt—mortgages, credit cards, auto loans, and other forms of borrowing – much better, the report shows.  Americans were delinquent on 4.8% of total debt in the first quarter. For comparison, at the end of 2009, 11.9% of consumers were delinquent on their debt by at least 30 days. The increase in household debt may indicate that more Americans are confident about…