Bank Book Q1 2024 Released; Biden Penalizes Consumers Who Refinance
- Mar 10, 2024
- 5 min read
Updated: Jul 11
"And what is good, Phaedrus,
And what is not good --
Need we ask anyone to tell us these things?"
Robert Pirsig
March 11, 2024 | Premium Service | We’ve released the new edition of The IRA Bank Book for Q1 2024. Suffice to say that the credit metrics that went sideways for most of 2022 and 2023 are now headed higher. Hockey stick in fact. Look for a coupon for the stand alone edition of The Bank Book at the end of this comment.
Autos and credit cards are above 2019 levels of net loss, but 1-4 family residential loans remain in negative net loss territory. Yet even in housing, fatigue from inflation and a qualitative recession is showing up in rising delinquency among low FICO borrowers.
Source: MBA, FDIC
The divergence between high and low FICO cohorts among consumer lenders in credit cards, auto loans and yes even residential mortgages is profound and troubling. H/T to Mark Zandi at Moody's Analytics for being even more bearish than The IRA on consumer credit in Q4. To be clear, the volume of loss is still low, but rising loss-given default (LGD) is a leading indicator of bad things to come in consumer credit. The chart below shows LGD for $550 billion in mostly prime bank auto loans.
Source: FDIC/WGA LLC
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