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Reports US

US stock market daily report (August 21, 2014, Thursday)

August 22, 2014, Friday, 04:53 GMT | 23:53 EST | 08:23 IST | 10:53 SGT
Contributed by Millennium Traders

The sub-prime auto loan business of 2014 is surging with volumes rising up to 12.7%. On the downside, compared with Q2 2013, the rate of vehicle repossessions has risen by more than 70% to 0.62%. The 60-day loan delinquency rate rose to 0.62% of borrowers from 0.58% in same period of 2013, representing an $859 million increase in delinquent auto loan balances. The 30-day delinquency rate grew to 2.39% from 2.38% in 2013, resulting in an increase by $2.8 billion. As the number of vehicle loans by subprime borrowers increases, so has the number of borrowers falling behind on their payments. People with credit scores lower than 620 are considered subprime or deep subprime borrowers. Since 2009, auto loan securitizations have surged 150% to $17.6 billion in 2013.

Experian plc (EXPGY - Other OTC) - credit reporting agency - reported that delinquencies and repossessions are rising, primarily driven by borrowers who would be classified as subprime and deep subprime.

Melinda Zabritski, senior director of automotive finance for Experian Automotive said in a statement, "The rosy glow of perfect payment performance in the automotive space is beginning to tarnish. We're starting to see a slight uptick in the number of consumers struggling to make their automotive payments on time; however, we have to keep in mind that these percentages are still extremely low."

All lender types experienced growth in loan volume compared with 2013 - auto loans grew by $31 billion, credit unions by $25 billion, finance companies by $24 billion and captive finance companies by $9 billion. During Q2 2014, outstanding auto loan balances hit an all-time high of $839.1 billion. The surge reflects the trend of the car-buying public finding a welcome audience in banks and car companies resulting in total of auto loan balances for Q2 holding at 11.7% from same period in 2013.

Highest vehicle delinquency rates appear in the southern part of the USA with Alabama, Louisiana and Mississippi at or near the top of the list. Lowest vehicle delinquency rates occured in Alaska, Iowa, Oregon and Utah.