Newer Subprime Auto Loans Faring Worse Than Older Ones
Automobile loan performance for higher risk borrowers in the US deteriorated further in April, with worrisome signs that more recent loans are faring worse than older ones.
In April 2008, Moody’s All Pools Market Index for subprime auto loans rose 1.7% to 165.6, implying lifetime losses 65.6% higher than the benchmark level, and corresponding to cumulative projected lifetime losses of 8.18%. The Index was up 33% from a year earlier.
In continuation of another recent trend, newer transactions accounted for an increasing share of performance deterioration relative to older pools.
Market Indexes rose across the board and at an increasing pace, implying average projected lifetime pool losses that are weaker than last year at the same time and that are deteriorating at a faster pace than in previous months, Moody’s said.
Prime auto loans fared better: in a separate report Moody’s said the net loss rate was 0.93% in April, an increase of 80% from 0.52% recorded in the year-prior period. However, the net loss rate fell 12% from the March 2008 level of 1.07%. the second month in a row that the rate declined.
The delinquency rate rose to 0.57% during April 2008, a 46% increase from its year ago level of 0.39%. Although both net loss rate and delinquency rate increased on a year-over-year basis, they are still within historical ranges, Moody’s said.
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