By Josh Zumbrun
The number of subprime auto loans slipping into delinquency climbed to the highest level since 2010 in the third quarter, and is following a pattern much like the months heading into the 2007-09 recession, according to new data from the Federal Reserve Bank of New York.
Overall "auto loan delinquency rates were low and relatively flat," said Andrew Haughwout, senior vice president at the New York Fed. But he noted there are "significantly higher, and rising, delinquency rates among subprime auto loans."
In the aftermath of the financial crisis, which was brought about by the collapse of the subprime housing market, lenders largely refrained from making auto loans to borrowers with similarly low credit scores.
Subprime mortgage lending remains at very low levels. But as the financial system has recovered, subprime auto loans have returned in force.
New auto loans to borrowers with credit scores below 660 have nearly tripled since the end of 2009. So far in 2016, about $50 billion of new auto loans per quarter have gone to those borrowers. About $30 billion each quarter has gone to borrowers with scores below 620, which are considered bad.
Write to Josh Zumbrun at Josh.Zumbrun@wsj.com
(END) Dow Jones Newswires
November 30, 2016 11:27 ET (16:27 GMT)
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