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Highest Auto Delinquencies; PeerIQ’s MPL Loan Performance Monitor
By Vy Phan
February 17, 2019
Greetings,
US core inflation rose by 2.2% YoY in January. Inflation remains steady around the Fed’s 2% target. The Fed is holding off on raising rates in the near future propelling asset prices to an 8-week rally.
The Fed’s latest report on Household Debt and Credit showed that total household debt increased by $32 Bn (0.2%) to $13.54 Tn in 4Q2018, marking the 18th consecutive quarter of growth. Total debt is now $869 Bn higher than its previous peak, although it remains below its peak on a per-capita basis.
The report also showed that more than 7 Mn auto loans are delinquent for more than 90 days. This is the highest number of seriously delinquent auto loans ever and is driven mainly by subprime borrowers. Over 8% of subprime borrowers are seriously delinquent on their auto loans, but this percentage is still well below its peak of 9.7% seen in 2010.
In regulatory news, Square’s ILC charter application has managed to avoid the backlash that Walmart’s application received. This is mainly because Square’s primary business is seen as being closely aligned to banking, while Walmart was trying to diversify its retail operations into financial services.
The Conference of State Bank Supervisors (CSBS) has agreed to implement 14 of the recommendations made by FinTech companies like PayPal, Western Union and SoFi. The CSBS will develop a state examination system that simplifies the examinations of nonbanks operating in multiple states and build an online database of state licensing guidelines.
Banks continue to diversify their product offerings. Citigroup has launched a new consumer loan product and a new high-yielding savings-account as part of its digital bank. The Citi Flex Loan will allow select existing Citi credit card customers to convert part of their credit lines to a loan with a fixed APR. The Citi Accelerate Savings account is an online savings account offering an interest rate of 2.36%.
Morgan Stanley has acquired Solium Capital for $900 Mn in its biggest acquisition post-crisis. Solium Capital manages the employee stock plans for nearly 3000 corporations. MS wants to court the employees of these companies, as they get wealthier, for its wealth management business. Citi is focusing on mass market digital consumer banking offerings while MS is going after wealthier clients for its wealth management business.
JP Morgan has become the first US bank to launch its own cryptocurrency. JPM Coin is a digital token that will be used to instantly settle transactions between clients of its wholesale payments business.
There is some good news regarding the Equifax data breach that affected nearly 140 Mn Americans in 2017. The data seems to have disappeared and has not made its way to criminal websites. Identity theft and fraud losses may remain substantially lower than initially expected.
In FinTech financing news, Nav a small-business lending marketplace, raised $45 Mn from GS Principal Strategic Investments among others. Nav will use the funds to expand its platform and to support more funding partners.
CommonBond, an online student loan refinancer, has raised a $750 Mn credit line from GS, Citi among others. CommonBond will use this credit facility to expand its lending operations.
In securitization news, KBRA has rated the senior tranche on Upgrade’s second ABS deal A. UPGR 2019-1 is a $227 Mn securitization. The collateral pool has 21,670 loans with an average loan size of $11,181 and a weighted average loan term of 44 months.
KBRA has rated the senior tranche on Upstart’s fifth ABS deal A-. UPST 2019-1 is a $231 Mn securitization. The collateral pool has 21,892 loans with an average loan size of $11,770 and a weighted average loan term of 57 months.
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PeerIQ’s Webinar on Tools for Whole Loan Investors Thank you for joining our webinar on Tools for Whole Loan Investors! We discussed:
In case you missed it, you can view the recording of the webinar here. Source: PeerIQ |
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PeerIQ’s Loan Performance Monitor (as of December 2018) We are pleased to release our latest MPL Loan Performance Monitor which tracks the delinquency rates, cumulative losses, cumulative prepays and transition matrices using public marketplace lending data that comprises unsecured consumer loans originated by Marketplace Lenders. Some highlights from the latest (as of December 2018) report are:
Source: PeerIQ |
Industry Update:
- Inflation Remains Contained Amid Fed Patience on Rates (Bloomberg, 2/13/19) US inflation rose by 2.2% YoY in January. Inflation remains steady around the Fed’s 2% target.
- Retail Sales Unexpectedly Fall the Most in Nine Years (Bloomberg, 2/14/19) Retail sales fell by 1.2% in December. Economists were expecting growth in the holiday quarter.
- Total Household Debt Rises as 2018 Marks the Ninth Year of Annual Growth in New Auto Loans (Federal Reserve, 2/12/19) The Fed’s latest report on Household Debt and Credit showed that total household debt increased by $32 Bn (0.2%) to $13.54 Tn in 4Q2018. The full report is available here.
- Auto-Loan Delinquencies Are the Highest Since 2012 (Bloomberg, 2/12/19) This is the highest number of seriously delinquent auto loans ever and is driven mainly by subprime borrowers.
- Square's banking bid avoids backlash that doomed Walmart's (American Banker, 2/12/19) Square’s primary business is seen as being closely aligned to banking, while Walmart was trying to diversify its retail operations into financial services.
- States agree to sweeping reg reforms for fintechs (American Banker, 2/14/19) The CSBS has agreed to implement 14 of the recommendations made by FinTech companies.
- Citi rolls out new personal loan, online savings account (American Banker, 2/12/19) Citigroup has launched a new consumer loan product and a new high-yielding savings-account as part of its digital bank.
- Morgan Stanley, in Its Biggest Deal Since Crisis, Courts Future Millionaires (WSJ, 2/11/19) MS wants to court the employees of these companies, as they get wealthier, for its wealth management business.
- JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business (CNBC, 2/14/19) JPM Coin is a digital token that will be used to instantly settle transactions between clients of its wholesale payments business.
- The great Equifax mystery: 17 months later, the stolen data has never been found, and experts are starting to suspect a spy scheme (CNBC, 2/14/19) The data seems to have disappeared and has not made its way to criminal websites, significantly lowering the risks of identity theft.
- Small-business fintech Nav raises $45 million (American Banker, 2/12/19) Nav a small-business lending marketplace, raised $45 Mn from GS Principal Strategic Investments among others.
- CommonBond Boosts Lending Capacity with $750 Million from Goldman Sachs, Citi and More (CrowdFund Insider, 2/14/19) CommonBond, an online student loan refinancer, has raised a $750 Mn credit line from GS, Citi among others.
- UPGR 2019-1 PreSale (KBRA, 2/11/19) KBRA has rated the senior tranche on Upgrade’s second ABS deal A.
- UPST 2019-1 PreSale (KBRA, 2/14/19) KBRA has rated the senior tranche on Upstart’s fifth ABS deal A-.
Lighter Fare:
- A rock from the Moon has a tiny piece of Earth inside it (Economist, 1/31/19) A rock brought back from the moon has elements from Earth in it, showing that the moon was created by material from the earth.