Consumer ABS volume potential for 2013 may be suppressed by the rise in student loan debt, a new Wells Fargo report said.
Analysts said that based on 3Q12 consumer spending figures released on Tuesday by the Federal Reserve Bank of New York (FRBNY) in its Quarterly Report on Household Debt and Credit, student loan debt increased to 35.3% in 3Q12 up from 34.5% in 2Q12.
The report shows that at the same time, the share of consumer borrowing for credit card and other consumer debt has been gradually declining as the student loan share has grown.
Wells Fargo analysts said that a potential excess in student loan borrowing may affect consumers future spending or borrowing ability. “These trends, should they continue into 2013, suggest the potential for only modest growth in consumer ABS issuance next year,” analysts said in the report.
Lending in auto loans is the one place where analysts said growth will continue into 2013. Wells Fargo said that auto loans outstanding rose 5.1% over the past four quarters and has increased 9.4% since hitting their low point in Q2 2010.
Credit card loans outstanding are stabilizing at lower levels and analysts said that ABS issuance in this space next year, is likely to be just enough to replace the bonds maturing in 2013.