Auto & Student
Warning: Subprime Auto Loans Exploding
Comptroller of the Currency Thomas Curry raised a rare red flag, saying in a speech that some activity in auto loans “reminds me of what happened in mortgage-backed securities in the run-up to the crisis.”
Thru mid September, Wall Street firms issued nearly $70 billion in securities backed by auto loans, up 9% from the same period a year ago, according to J.P. Morgan. About $21 billion of those were backed by subprime loans to relatively risky borrowers.
In the first half of 2015, lenders dispensed $56.4 billion in subprime auto loans, increasing 13% from the same period a year ago and up 181% from the first half of 2009, according to credit-reporting firm Equifax Inc.
In addition, 29% of the new car loans given out in the second quarter of this year had a repayment period of 73 to 84 months, up 20% from a year ago, according to Experian Automotive.