Auto loan default rates should stay low, and consumer interest rates on auto loans shouldn’t feel any 1-to-1 impact from yesterday’s ¼% interest rate hike, according to David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.
The auto loan default rate for November was 1.04%, down just 1 basis point from 1.05% a year ago, according to a report released today.
On Wednesday, the Federal Open Market Committee in effect announced a 25-basis-point increase in the federal funds rate, from 0%. Blitzer said the move was no surprise, calling it “one of the most widely anticipated adjustments to Fed policy in decades.”
Auto loan rates are more likely to be affected by demand and other factors, as opposed to a lockstep response to an increase in the fed funds rate, he said in a written statement. “It will take much more than one Fed move to affect consumer borrowing costs,” Blitzer said.
In fact, Fed Chair Janet Yellen indicated in a press conference on Wednesday lenders should expect additional small and gradual rate increases in 2016.
