A Note on Recent Dynamics of Consumer Delinquency Rates

Overview

Consumer delinquency rates for credit cards and auto loans have increased significantly since the pandemic, reaching levels comparable to the Great Financial Crisis. This trend is particularly pronounced among lower-income households.

Key Insights

• Delinquency Rates: Credit card and auto loan delinquencies have returned to pre-pandemic levels.
  • Evidence: Federal Reserve Bank of New York Consumer Credit Panel/Equifax data.
  • Verifiable: Yes
• Income Impact: Auto loan delinquencies have increased among lower-income households.
  • Evidence: Analysis of income group data.
  • Verifiable: Yes
• Credit Score Trends: Credit performance has stabilized across credit scores for credit cards but worsened for non-prime auto loan borrowers.
  • Evidence: Credit score distribution data.
  • Verifiable: Yes

Why It Matters

This trend indicates potential risks in consumer credit markets, particularly for lower-income borrowers, impacting retail banking and lending sectors.

Actionable Implications

• Risk Management: Monitor delinquency trends to adjust risk assessments.
• Lending Strategies: Consider tightening lending standards for auto loans.
• Customer Support: Develop targeted support for lower-income borrowers to manage delinquencies.