The credit performance of prime and subprime auto asset–backed securities are expected to improve in March and April as tax refunds provide a temporary boost to consumer cash flow, according to Fitch Ratings.
The improvements are expected after both prime and subprime annualized losses peaked in February following six months of softening. Despite the extended period of increasing losses, Fitch said loss rates remain at historic lows and are only marginally higher than the record lows recorded in 2012 and 2013.
In the prime sector, 60 day-plus auto delinquencies were flat in February at 0.39% versus January, and 5% below the February 2013 level. Prime annualized net losses inched up in February, rising to 0.49% from 0.48% the previous month.
Subprime delinquencies,meanwhile, fell 1% month over month in February, which Fitch said is a good sign for asset performance in coming months. 60 day-plus subprime auto delinquencies were at 3.80% last month, down from 3.84% in January, according to Fitch.