Subprime lending highest since financial crisis: Equifax
WASHINGTON (2/23/15)--Nearly four in 10 loans made in the United States during the first 11 months of 2014 went to subprime borrowers, the highest number since the economic downturn, according to data from Equifax (The Wall Street Journal Feb. 18).
More than 50 million consumer and credit card loans were made over the stretch totaling more than $189 billion, the highest number since 2007 when subprime lending accounted for 41% of consumer lending outside of home mortgages, the data revealed.
The return of subprime lending could signal that Americans are willing to take on more debt. The Federal Reserve Bank of New York unearthed hints of this last week when it found that household debt had climbed 2.7%, or $306 billion, annually in the fourth quarter last year, the largest expansion since the third quarter of 2010.
"We're going from an era where for many years credit was extremely tight to an era where credit is now looser," said Gabriel Dalporto, chief marketing officer for Lending Tree, a nonbank lender similar to many others that have entered and helped re-expand the subprime market (The Journal).
On average, borrowers with a credit score below 650 owed $48,000 across all debt obligations, including mortgages, in October 2014, according to San Jose, Calif.-based Fair Isaac Corp. In October 2012, that number was $55,000, and in October 2008 it was $61,000.
Despite the recent increase in subprime lending, however, mortgage lending has remained an exception, The Journal said.