Extension rates in March for U.S. auto loans held in securitized portfolios remained above pre-pandemic levels, despite improving economic tailwinds that have caused rates to decline to their lowest levels since the April 2020 outbreak of COVID-19 in the U.S.
S&P Global Ratings reported that auto loans in public asset-backed securities (those filed under Reg AB II with loan-level data) showed that prime auto ABS pools had extension rates for borrowers to drop to 0.4% from 0.46% in February, while subprime ABS deals had extension rates of 2.4% in March compared to 3.5% the month prior.
“Nonetheless, public prime and subprime extensions remained higher than February 2020 levels of 0.32% and 1.53%, respectively, as the job market hasn’t returned to pre-pandemic levels, especially in the leisure and hospitality sectors,” an S&P press release stated.
In its new report, S&P also noted that charge-offs for loans extended during March and April 2020 have been tracking lower than those that were charged off in the months prior (January and February 2020).
The cumulative charge-off rate for prime loans is 2.1% between April 2020 and February 2021. For subprime loans, the rate is 8% since a year ago April.
