Although auto lenders are tightening credit underwriting standards, originations and auto debt continued to grow this quarter, the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit showed this week.
The Reserve Bank of New York reported $132 billion in auto loan originations for the first quarter, up from $124 billion during the same quarter the year prior.
The pull back has mainly been among the larger banks, Auto Finance News has previously reported, however overall industry growth continues from smaller lenders in the space.
“I think we’re in pretty good shape for this continued growth,” William Strauss, senior economist and economic advisor for the Federal Reserve Bank of Chicago, said during a presentation at the Auto Finance Risk and Compliance Summit on Monday. “The pull back that we’ve seen might be a bit warranted because the last thing you want to do is push an industry that might be tapering off and push sales even further — that would undercut profitability.”
Auto debt balances reached $1.17 trillion, up from $1.07 trillion in the first quarter 2016. Auto loans now represent 9% of all U.S. debt, and are the second largest contributor to non-housing debt balances behind student loans.
Those increases came against the backdrop of a flat 90+ day delinquency rate and rising median Fico scores, which the report points to as a sign that lenders are tightening their standards.
However, auto loans made up a larger percentage of all 90 days or more delinquent balances, when compared to the same period the year prior. Furthermore, the Liberty Street Economics blog run by the New York Fed notes, “auto loan delinquency flows have been trending upward since 2012.”
