Total household debt increased by $116 billion to reach $12.96 trillion in the third quarter of 2017, according to the latest Quarterly Report on Household Debt and Credit released today by the New York Fed’s Center for Microeconomic Data.
Household debt has been growing since mid-2013, boosted in part by steady growth in auto loan balances, which have grown for twenty-six consecutive quarters thanks to record-high levels of newly originated loans.
Although new vehicle sales had begun to slump over the summer after several strong years of growth, September and October saw a rebound in sales, ending with over 18 million vehicles sold (seasonally adjusted at an annualized rate), and auto loan originations in the third quarter were commensurate with these numbers.
Since 2011, the overall delinquency rate of loans originated by auto finance companies has significantly deteriorated. The 90+ day delinquency rate for bank auto loans has been steadily improving since the financial crisis while the delinquency rate for auto finance companies has been sharply increasing since 2014.
The delinquency rates by the origination credit score of the borrower shows that while the delinquency rates for borrowers with credit scores of 660 or higher appear to be somewhat steady, the data shows subprime delinquency rates are really where the pressure is.