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A Tale Of Two Credit Markets: New Auto Loans Highest In 9 Years As New Mortgages Slump Near Record Lows

Tyler Durden's picture




 

Remember when three weeks ago, everyone was stunned as the Manufacturing ISM soared to new 3 year highs, continuing this summer's trend of blistering manufacturing, which was largely attributed to a burst of automotive production? Now, courtesy of the latest Q3 household credit report by the NY Fed, we know just how it was funded. According to the report, some $105 billion in new car loans were issued is the third quarter, the highest amount since 2005, and just $20 billion shy of an all time high.

That's the good news. The bad news as Equifax reported two months ago, new subprime loan origination is trending at about 31% and rising. And what's worst, is that recently both Moody's and Fitch joined forces in making up for their past oversights, and "slammed subprime auto bonds" suggesting this latest bout of subprime driven euphoria boosting the US manufacturing sector may not last. Or it very well may: after all the central banks are always on the lookout for new things to monetize.

 

But while US consumers just can't get enough of car loans, they are increasingly giving up on that other, levered purchase: mortgages. As the next chart shows, mortgage origination, while rebounding modestly from recent record lows, is still at levels that otherwise would suggest a broad economic recession.

Perhaps when all else fails, US households can just live out of their financed cars.

Source: NY Fed

 

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Tue, 11/25/2014 - 13:41 | 5486676 mayhem_korner
mayhem_korner's picture

 

 

Cars are easier to repo than houses. 

Tue, 11/25/2014 - 13:47 | 5486718 A Nanny Moose
A Nanny Moose's picture

Buy a van. You can live in it, when we are all standing in bread lines. Hard to repo that which moves.....then again....Onstar knows where you are at all times.

Tue, 11/25/2014 - 16:45 | 5487749 dicksburnt
dicksburnt's picture

wait until we find out pension funds were stuffed full of 0%, 6 year loans.   After the massive defaults whereby GM makes billions on the repo's the Prestident of the US can come TV and tell Americans "the pension funds were looking to gain yield in a low rate environment".   The sheeple will be placated.

Tue, 11/25/2014 - 13:42 | 5486681 FreeShitter
FreeShitter's picture

Fancy cars > Homes to the sheeple.

Tue, 11/25/2014 - 14:52 | 5487171 NihilistZero
NihilistZero's picture

Sheeple can afford neither.  But currently financing for one is availiable to them while the other is not.

Tue, 11/25/2014 - 17:56 | 5488145 dicksburnt
dicksburnt's picture

ever see a jobless, homeless, hungry person drive a new vehicle? .... stick around, America will be providing 10's of millions of them for your viewing pleasure, shortly

Tue, 11/25/2014 - 13:43 | 5486686 Bunga Bunga
Bunga Bunga's picture

... and this time the collateral has wheels, LOL.

Tue, 11/25/2014 - 13:45 | 5486697 Yen Cross
Yen Cross's picture

     There should be thousands of slightly melted quality used vehicles hitting the markets over the next several weeks...It's going to be a subprime lenders paradise.

Tue, 11/25/2014 - 13:50 | 5486737 gaoptimize
gaoptimize's picture

In two years, record car loans will decline and be replaced with record payday loans.

Tue, 11/25/2014 - 14:15 | 5486923 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

Two years...??

I'll take the under....

Tue, 11/25/2014 - 13:52 | 5486758 tommyb34
tommyb34's picture

No down payment, no credit check auto loan commericals are at an all time high.  Doesnt remind me of the 2006 housing market at all, no, not at all.

Tue, 11/25/2014 - 13:59 | 5486819 Ghostdog
Ghostdog's picture

People finally downsizing from a house to a car to live in..... lol

Tue, 11/25/2014 - 14:14 | 5486918 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

Can't afford a home anymore (thank to the fed)...??

Fuck it, buy a car.  This will all end well.

Tue, 11/25/2014 - 14:25 | 5486993 Farmer Joe in B...
Farmer Joe in Brooklyn's picture

Speaking of cars (my semi-off-tangent rant for the day)....

Can anyone defend those ridiculous bumper-guards that people drive around with on their cars..??

I get that they are to prevent bumper dings.  That said, you drive around with this ridiculous looking thing on your car to prevent $500 or so in bumper damage (which won't even financially impact you until you sell it)...?? 

If you're so fucking concerned about a few extra dollars in damage and the effect on eventual resale value, then you paid too much (given your financial situation). 

Unless you plan on turning the car around in a couple of years, it's completely pointless and you look like a tool.

I drive a 2006 Ford Explorer.  Bring on the dings.  I'll live.

Tue, 11/25/2014 - 14:44 | 5487127 SweetDoug
SweetDoug's picture

'

'

'

Actually, I've been looking at the bumper protection things that go on the bumper protection things that protect my bumper, so they don't look too dinged up…

 

•?•
V-V

Tue, 11/25/2014 - 16:04 | 5487526 Dead Man Walking
Dead Man Walking's picture

OMG, what's next, taking off the clear plastic covers on the sofa ?

Tue, 11/25/2014 - 18:04 | 5488175 knukles
knukles's picture

No.
Mrs K's friend next door, the wife of the ancient German guy who still plays marching music late at night and still speaks only in German, got tailored clear heavy plastic covers to go over all the furniture ion her living and family rooms.  Seriously.  He just sits there screaming about hell, fire and brimstone, prefers a wheel chair when he still can walk, cries uncontrollably and then will start screaming like Hitler in those funny movie clips.  He's incontinent, too, so maybe that has something to do with it.  I asked him if I could have that small burlap (well, not really so small) drawstring bag he keeps tied around his belt and he got really almighty God pissed at me.  Sounds like baby metal stone or something when he marches.  Guy's fucking nuts. 

Tue, 11/25/2014 - 15:32 | 5487383 moneybots
moneybots's picture

" The bad news as Equifax reported two months ago, new subprime loan origination is trending at about 31% and rising. And what's worst, is that recently both Moody's and Fitch joined forces in making up for their past oversights, and "slammed subprime auto bonds" "

 

Moody's is making up for past oversights?  The horses are out of the barn, already.  Out of the corral, even.  Slam subprime auto bonds well after people have bought them up, already.

Tue, 11/25/2014 - 18:14 | 5488235 ersatz007
ersatz007's picture

I got an email from Wells Fargo letting me know how much I would save if i refinanced my Auto Loan. I shit you not.

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