Subprime bubble isnêt, says Equifax; NY Fed weighs in
Two recent reports on subprime auto lending, by Equifax and the New York Federal Reserve, try to put to rest some of the fears that have been raised by recent media reports.
While the subprime lending segment needs to be monitored carefully, the evidence at this time does not suggest there is a bubble forming, says Dennis Carlson, deputy chief economist for Equifax and an author of the report. The report shows that subprime auto loans have been fairly stable since 2012, and that new loans have been shifting toward the higher end of subprime scores. Recent subprime loans have performed well year to date.
The New York Fed found last year that 23 percent of auto loans went to borrowers with credit scores below 620. Although that is a significant share, it is still lower than the 25 to 30 percent share in the years before the Great Recession. In recently revisiting subprime data, the New York Fed found that subprime share has risen only slightly since 2010.Download Bulletin PDF