Deep Subprime Auto Securities Grow to 32% of the Market | Auto Finance News | Auto Finance News

Deep Subprime Auto Securities Grow to 32% of the Market

Morgan Stanley The share of deep subprime auto loan securities has grown to nearly a third of the total subprime auto ABS market, Morgan Stanley researchers said in a March report.

Auto securities considered deep subprime — Fico scores below 550 — have increased to 32.5% of the subprime market, up from 5.1% in 2010, the report states.  

Delinquencies are rising in the market overall, but those deep subprime loans are deteriorating at a faster rate than the subprime market. Deep subprime borrowers 60 days delinquent or more have grown three percentage points since 2012, while subprime borrowers — generally considered to have a Fico scores between 550 and 600 — have increased by 0.89 percentage points.

“The securitization market has become more heavily weighted towards issuers that we would consider deep subprime,” the report states. “Auto loan fundamental performance, especially within ABS pools, continues to deteriorate.”

Some of the growth has been “augmented, if only slightly,” by the emergence of new issuers in the deep subprime space that were not issuing prior to the financial crisis, the report states. New lenders represented 2.2% of the overall deep subprime pool in 2016, compared to 0.9% in 2012 when new players first started to emerge.

New lenders in the space were actually down in 2016 from a peak of 3.7% of the market in 2015, Morgan Stanley reports.  

Learn more about the tech and disruption in the industry at Auto Finance Innovation 2017, May 17-18 in San Diego. Visit and to learn more about the Auto Finance Risk & Compliance Summit, visit

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