Auto Loans Revved Up in 2018

A recent report by the Federal Reserve Bank of New York finds that new auto loan volume had the highest year on record in 2018, at $584 billion, and Americans borrowed less for home loans.

Meanwhile, mortgage originations in Q4 2018 dropped $43.8 billion over the previous quarter, the lowest reading since Q1 2016. As well, mortgage originations were at the lowest level since 2014 for all of 2018. Auto loans have been growing since 2010, and in the final quarter of last year, were buoyed mostly by borrowers with credit scores over 760, who originated roughly 30 percent of outstanding auto loans. Subprime borrowers accounted for 22 percent of all auto loan balances, Realtor.com reports.

Overall, U.S. household debt rose by $32 billion to $13.54 trillion in the fourth quarter, the 18th consecutive increase. Household debt levels sagged in the aftermath of the recession as families tried to pay down what they owed. But debt has made a comeback since 2013 and today stands at $869 billion above the previous peak reached in 2008, driven in part by a rise in student and auto loans.

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