Higher Auto Prices Impact Loan Performance

The Wall Street Journal reports that seasonalized severe delinquency rates among auto loans have reached the highest levels seen since 2006, due in part to record-high auto prices. Defaults and missed payments for sub-prime auto loans issued in early 2022 are similar to those from 2008, according to S&P data. While auto delinquency rates are typically correlated with higher unemployment rates, these increased delinquencies are unusual given the relatively tight current labor market and may be exacerbated as student loan repayments restart in September.

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