Subprime Delinquencies Growing

According to Fitch Ratings, the number of delinquent securities backed by subprime auto loans has hit an 11 year high. The report shows that the number of people unable to pay their auto loans greatly increased last month, and they expect it to be even higher this month.

With consumer debt levels increasing daily, it was only a matter of time until the auto loan industry started seeing record numbers as well. The report states that delinquencies 60 days or more on subprime auto loans increased 4.28% in September, which is 40% higher than the same month last year and 18% higher than it was in August of this year.

They say that it is due to a depressed economy, because consumers are already behind on many things and auto loans are the least of their worries. With “household debt levels and declining home values, as well as the deteriorating job market,” it was only a matter of time until the subprime auto loan market started seeing high levels of delinquencies.

The annualized net loss on prime auto loan backed securities fell 1.68% that same month. This is 3% lower than it was in August of 2008. The company tracks roughly $59 billion in asset backed securities that have some kind of tie to auto loans. Of that 68% is prime and 32% is subprime.

 

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