Here Are The People Behind The American Auto Recovery

The New York Fed’s
Quarterly Report On Household Debt And Creditis out.

And while overall household debt fell by $US78 billion in Q2, total auto loan balances increased by $US20 billion during the period.

“Bureau of Economic Analysis data indicate that light motor vehicle sales, which fell sharply during the Great Recession to levels that hadn’t been seen since the early 1980s, made a V- shape recovery,” note the NY Fed.

“Delinquency rates improved considerably, with the overall 90-plus day delinquency rate falling to 5.7 per cent, the lowest it has been since mid-2008,” they added.

The report includes some interesting charts about auto loans, including one that breaks them down by credit score and another by age.

“About 23 per cent of new auto loans (calculated as a share of aggregate loan balances originated) were issued to borrowers with credit scores under 620 in 2013:Q2, well below the 25-30 per cent shares that we have seen historically,” they said. “On the other end, the share of borrowers with credit scores over 720 peaked at over 50 per cent during the recession and is about 45 per cent now.”

“Does the slower recovery in the other age groups reflect that people are taking out smaller loans, or that fewer people are borrowing?” they asked. “While borrowers of all ages took out smaller loans during the recession, average loan amounts have recovered their pre-recession levels for most groups. (The slight exception is 30- to 30-nine-year-olds, who took out the largest loans during the boom and remain about $US650 below their peak loan amounts.) So, declines in aggregate origination volumes are attributable to lower take-up, not smaller loan sizes.”

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