Auto loan balances increased by $30 billion to $905 billion as of June 30, according to the new quarterly report on household and credit debt released by the Federal Reserve this week.
The Fed also reported that $101 billion in auto loans were originated in the second quarter, the highest volume of originations since the third quarter of 2006.
An increase in auto lending, and particularly in the subprime sector, has been a hot topic as of late, after the New York Times compared subprime auto lending to the subprime mortgage sector, which led to the last financial crisis, in mid-July.
The Department of Justice then issued subpoenas to both General Motors Financial and Santander Consumer USA for documents related to subprime lending and securitizations, in early August.
The existence of a bubble that is poised to pop continues to be debated. However, data from the Fed shows a steady increase in loans originations across the credit spectrum since the fourth quarter of 2009, but growth was most pronounced for customers with credit scores below 660. The dollar value of originations to people with credit scores below 660 has roughly doubled since 2009, according to the Fed.
A group of four Analysts for the Fed viewed the data at the same period last year and concluded that, although there was a significant increase in subprime lending, it was still lower than the 25% to 30% share of subprime loans seen during the years leading up to the Great Recession.
“We’ve now revisited these statistics, and find again that the share has increased only slightly since 2010,” the analysts said.
