Consumers Opt For Auto Loans Rather Than Mortgages – Consumer Credit
Data released by the Federal Reserve Bank of New York found that Americans have been borrowing more for automobiles and less for homes. While new mortgages fell to their lowest levels since 2014, car loans have been steadily increasing. A weakening housing sector along with tepid wage growth has affected mortgage demand over the past few quarters.
Consumers who have been discouraged by a slowing housing market have instead stayed put and purchased new home goods and cars with their improving credit. Even though consumers are borrowing more overall, the Fed report noted that loan delinquencies have fallen since the financial crisis of 2008.
Relative to mortgage balances outstanding, auto loans were about 14% in 2018, up from 11% in 2014, meaning that auto loans have been making up a faster growing segment of consumer debt than mortgages. Mortgage loans still make up the single largest debt payment for consumers nationwide, with auto payments the second largest.
Sources: Federal Reserve Bank of New York; fred.stlouisfed.org
Disclaimer: The information published herein is provided for informational purposes only, and does not constitute an offer, solicitation or recommendation to sell or an offer to buy securities, investment products or investment advisory services. All information, views, opinions and estimates are subject to change or correction without notice. Nothing contained herein constitutes financial, legal, tax, or other advice. The appropriateness of an investment or strategy will depend on an investor’s circumstances and objectives. Please consult your Advisor about what is best for you.