Auto Loan Delinquencies Drop According to Fed Report
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UPDATED: May 15, 2013
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Auto loan delinquencies fell during the first fiscal quarter of 2013, according to a report by the Federal Reserve Bank of New York (Fed).
The Household Debt and Credit Report released by the Fed yesterday found that auto loan delinquencies fell from 4.0 percent during Q4 2012 to 3.9 percent in Q1 2013.
Auto loan delinquencies peaked at their highest rate during Q4 2010 when they reached 5.3 percent. Since then, the rate has slowly declined, taking over two years to reach its current place at 3.9 percent.
Other delinquency rates also improved. Mortgage loan delinquencies dropped from 5.6 percent in Q4 2012 to 5.4 percent in Q1 2013, credit card delinquencies shrank from 10.6 percent to 10.2 percent and student loan delinquencies decreased from 11.7 percent to 11.2 percent.
Beyond delinquencies, all forms of household debt dropped during the first quarter. Total household debt decreased one percent from the last quarter to $11.23 trillion. The highest peak of total household debt was during Q3 2008 when it reached $12.68 trillion.
Wilbert van der Klaauw, senior vice president and economist for the Fed, said the data suggests that reducing household debt has returned to its previous goal trajectory.
Despite a reduction in delinquencies, consumers were more open to some forms of consumer debt. Auto loan debt increased $11 billion since last quarter, making a grand total of $794 billion. The last time auto loan debt was this high was during Q4 2008.
Aside from increasing auto loan debt, the reduction in delinquency is a positive sign for the economy. It shows that although more debt is being taken on, it is being handled more responsibly than in the past.