Lenders Tighten Subprime Standards

Deterioration of loan performance has moved lenders to tighten standards. Based on Federal Reserve Senior Loan Officer survey data, we’ve seen the following changes since 2016:

  • 4 quarters of lenders reporting tighter loan standards
  • 5 quarters of increasing spreads on loan rates
  • 4 of 5quarters with increases in minimum required down payments
  • 5 quarters of higher minimum required FICO scores
  • 6 quarters of tightening policies on customers who do not meet credit score thresholds

S&P/Experian reported that the auto loan default rate fell to 0.82 percent in June 2017, the lowest level in the data series, which dates back to 2004.

From The Hill

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