Subprime Auto Lending On The Rise
In one signal that access to credit continues to improve after the recession, credit rating agency Experian Automotive reports today that the ratio of subprime auto loans made to new-vehicle buyers in the second quarter increased to 40.8 percent compared with 37.2 percent in the second quarter of 2010. As auto companies and the economy continue to strengthen, Experian said it is becoming easier for customers with less-than-perfect credit to get access to an auto loan.
After their bankruptcies and restructurings, General Motors Co. and Chrysler Group LLC underwent significant initiatives to secure funding and subprime-lending specialist operations to improve their ability to lend to buyers with subprime credit. Access to credit for automotive customers of all kind has been improving steadily since the recession and automakers say they have become more sophisticated in lending to subprime buyers.
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Wachovia economist Phillip Neuhart. “I think preics will be flat to slightly negative this year. I don’t think we’re going to see any imminent recovery.”The preics have been hurt by a glut of both new and existing homes on the market available for sale. The inventory of homes in the latest report rose 2.9 percent from December to 3.55 million. That’s up 23 percent from the supply of existing homes on the market a year ago, although its down 8 percent from the record high seen in July.The glut of homes for sale was greatly fed by the building boom of 2004 and 2005, rather than the more typical cause of a glut of homes that comes from an downturn in the economy or employment.Pat Vredevoogd Combs, a Realtor from Grand Rapids, Mich. and president of the national trade group, said the pickup in sales activity is important in restoring confidence to buyers and sellers in the market.”The market is trending up from its low last fall, and that is important in restoring confidence to buyers who’ve been on the sidelines,” she said in the group’s statement.Home builders’ have been particularly hard hit by the downturn in home sales and home preics. Hovnanian Enterprises (Charts) said Tuesday it expects to report a net loss in the most recent quarter.Toll Brothers (Charts) reported a sharp drop in earnings last week, while KB Home (Charts) reported a net loss in the most recent quarter earlier this month.Other leading builders reporting weakness in preics and reduced sales include Lennar (Charts), Pulte Home (Charts), D.R. Horton (Charts).A government report on new home sales and preics is due out Wednesday. While new homes are only a fraction of the overall real estate market, that is a more closely watched report because it is more of a leading indicator. New home sales are recorded at the time a sales contract is signed, while existing home sales readings are taken at the time of the closing, typically a month or two after a sales contract is agreed upon.Record home price slump