There is a lot of chatter in the financial press that a new credit bubble is well underway. Only this time it’s not about residential mortgages, but rather about auto loans (stay tuned for another blog on the student loan market as well…)

Below is a chart that graphs residential mortgages for the five-year period ending 2007. As you can see, the amount (in $trillions) rose by a whopping 84% over that time period, according to the New York Federal Reserve.

We also have a graph on the state of the auto loan market from 2012 to the end of 2016—a rise of 57% over that time period and now sits at around $1.1 trillion. (In case you’re wondering, the residential loan growth after the bubble burst, from 2012-2016, was actually 0%!).

In addition, the credit quality is worsening: about 27% of the auto loans originated at the end of 2016 were to people with credit scores less than 620 (subprime), up from a low of 11% in 2009, and a high of 41% in the second quarter of 2005. Charge-offs at one of the publicly traded bellwethers, for example, have risen to around 1.5%, up from 1% in the beginning of 2016. This may not seem meaningful, but an additional 0.5% in charge-offs on, say, $100 billion in loans means $500 million in losses, and eats into crucial equity. Someone is going to miss that amount…

To be sure, the auto market is much smaller than the mortgage market ($8.6 trillion) and is less likely to take down the banking system as in 2008-2009. In addition, the Fed is not waiting for the canary to drop dead in the coal mine: it has been sounding what many are interpreting as a warning on underwriting standards and fraud prevention.

For those interested in how the Fed sees the state of the market, check out “Auto Financing during and after the Great Recession” published by the Federal Reserve.