Rising Auto Delinquencies Overtake 2016’s Top Subprime Headlines

Subprime lender Santander Consumer USA continued to dominate the headlines in 2016, with new deep subprime securitizations and a feature in AFN’s September issue about how the lender has grappled with a string of compliance issues and lessening investor interest.

But Santander wasn’t the only story line to follow in the subprime space in 2016. With used car values on the decline and many lenders preparing for a future downturn in the industry, subprime is becoming even more risky.

Moody’s Investor Services, Fitch Ratings and the New York Fed all independently saw concerns in the subprime space, including delinquencies reaching a two-decade high. Other lenders such as Consumer Portfolio Services would raise similar warnings at the 2016 Auto Finance Summit.

But that hasn’t stopped smaller players from moving into the space. BlueFin Auto specifically said the possibility of a slowdown is a “good opportunity” for companies looking to go deeper down the spectrum. Honor Finance also issued its first securitization ever, and it was in the risky deep subprime space.

Rising delinquencies in subprime will continue to be a trend into 2017, but it’s too early to tell what effect it might have on the industry overall.

1. Santander’s Storm: When Will Skies Clear for the Subprime Giant?
2. Santander Adds to Deep Subprime Pipeline
3. Rising Subprime ABS Losses ‘Vary’ by Lender, Moody’s Says
4. Fitch: Subprime Auto Delinquency Levels Reach Two-Decade High
5. Subprime Shows ‘Weakness,’ Liquidity a Concern, SC CFO Says
6. Wells: Growth in Auto Volume, With Subprime Steady
7. NY Fed Notes ‘Notable Deterioration’ in Subprime Auto Performance
8. Honor Finance Issues ‘Risky’ Deep Subprime Auto ABS, Lawyer Says
9. ‘Negative Cycle’ Coming to Non-prime Auto Loan Market
10. BlueFin Auto: Subprime Slowdown Is a ‘Good Opportunity’