Late payments on both prime and subprime securitized auto loans continued to rise in December, reaching a five-year high according to Fitch Ratings.
For subprime securitizations tracked by Fitch (approximately $40 billion outstanding), loans more than sixty days late reached 5.45%, up from 4.7% a year earlier and “eclipsing rates recorded earlier this year and 41 basis points higher than during the recent recession,” Fitch stated in its monthly report.
The delinquency rate was at 5.04% at its previous peak level in early 2009. The ongoing declines in subprime auto ABS performance “are indicative of weaker underwriting in 2013-2015 securitizations, driven by heated competition and growth of less-established lenders,” wrote Fitch.
Prime delinquencies also rose, to 0.45%, which was higher than a year earlier but still “well within” historical levels as securitizations across the auto sphere move further from record lows recorded in 2012-2015.
Annualized net losses (ANL) in subprime loans were 10.41% in December, a decline from November and a steep drop from the December 2016 level of 18.7%. Fitch expects prime ANL to rise about one percentage point in 2017, and remain in the 10-12% range for subprime losses.
Fitch’s prime and subprime auto loan ABS indices total $98.5 billion in outstanding securitized collateral as of year-end 2016. That accounts for approximately 10% of all outstanding auto loan debt in the U.S. ($1.1 trillion).