In a discussion of the state of auto ABS at the Auto Industry Hot Topics Conference on Oct. 14, Amy Martin, senior director of asset-backed securities at Standard & Poor’s, said the company would soon revise its definition of “longer-term loans” with loans 72 months or longer, rather than 60 months or longer, as it stands now.
The average term on new vehicle loans is now 66 months, Martin said, up one month from a year ago and up three months from 2010. Martin estimated $90 billion in auto loans would be securitized in 2014, with just $20 billion of that subprime. Before the recession, as much as $22 billion was securitized.
Martin did say that “caution is warranted” in subprime, however, as the layering of risk — longer loan terms, low Fico scores, and higher loan-to-value ratios — could spell trouble in stress scenarios. Still, her overall outlook for the industry is “cautiously optimistic.”
