Balances on both new and used motor vehicle loans in the US have recovered to 2008 levels according to data released by the New York Federal Reserve Bank (FRBNY).
Light motor vehicle sales, which fell sharply from 2007 made a V-shape recovery, according to data from the Bureau of Economic Analysis, spurred in-part due to the low-interest rate environment and increasing the auto loan balance.
When originations are analysed by borrowers’ Equifax credit scores at the time of origination, there is little evidence to show the volume of new loans is being issued to riskier borrowers.
Approximately 23% of new auto loans were issued to borrowers with credit scores under 620, traditionally thought of as the sub-prime market, in Q2 2013, which is below the 25-30% historical share, however, the share of borrowers with credit scores over 720 peaked at over 50% during the recession and stands now at approximately 45%.
Meanwhile, the auto repossession rate in the US has dropped to new lows in Q2 2013, according to Experian Automotive.
0.36% of all vehicle loans ended in a repossession, down from 0.43% in Q2 2012 and a 10.4% decrease from the previous low of 0.41% in Q2 2006.
Additional findings from Experian show 30-day delinquencies decreased by 5.6% year-on-year, and 60-day delinquencies remained relatively flat, at 0.58%.