While carmakers were celebrating strong sales in November that are expected to aim the industry towards its second consecutive sales record, the Federal Reserve sent a signal that the industry ought to be a little bit more cautious about the subprime loans that have helped fuel the boom during the past couple of years.
In a press release issued the same day that sales figure appeared, the Federal Reserve Bank of New York, which keeps an eye on consumer credit noted in its latest Quarterly Report on Household Debt and Credit that there has been a “small” increase in overall debt in the third quarter of 2016, bolstered by gains in non-housing debt.
“Mortgage balances continue to grow at a sluggish pace since the recession while auto loan balances are growing steadily. The rise in auto loans has been fueled by high levels of originations across the spectrum of creditworthiness, including subprime loans, which are disproportionately originated by auto finance companies,” the New York Fed noted. (more…)