Click to enlarge.
The 48-month auto rate for May 2013 was 4.13%.
The 24-month personal loan rate for May 2013 was 10.34%.
The spread between the two loans now stands at a new record: 6.21%.
This reminds me of something Ben Bernanke once said:
The world in which we live, as opposed to the one envisioned by the benchmark neoclassical model, is one in which credit markets are not frictionless, i.e., problems of information, incentives, and enforcement are pervasive. Because of these problems, credit can be extended more freely and at lower cost to borrowers who already have strong financial positions (hence, Ambrose Bierce’s definition of a banker as someone who lends you an umbrella when the sun is shining and wants it back when it starts to rain).
Got storm shutters?
Source Data:
St. Louis Fed: Custom Chart
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