Securitization in Focus — March 2025
Asset-backed Securities
Tariff Outlook on Auto ABS Market
700K
Estimated reduction in new vehicle sales
in 2025
The evolving tariff outlook could significantly influence the auto ABS market, with estimates projecting a decline of 500,000 to 700,000 new vehicle sales in 2025.
3K-12K
Estimated price increases
Potential price increases tied to tariffs may range anywhere from $3,000 to $12,000 per vehicle, further pressuring affordability and consumer demand.
84MM+
… and counting
Rising vehicle prices and market uncertainty may push lenders to extend loan terms beyond the already lengthy 84-month options to preserve affordability.
YTD issuance stands at $85.6 billion, representing a 6.3% decline compared to the same period last year.
ABS Issuance ($B)
ABS delinquency rates
Consumer performance remains mixed, with month-over-month fluctuations in delinquency levels across consumer-related ABS, showing both increases and decreases.
Commercial Mortgage-backed Securities
CMBS Issuance ($B)
1Q25 non-agency CMBS issuance was one of the strongest quarters on record. A surge in commercial real estate collateralized loan obligation (CRE CLO) issuance stands out with YTD volume close to the full year supply from the last two years.
CMBS Delinquency Rates
After two consecutive months of decline, the CMBS delinquency rate rebounded to 6.65% in March, up from 6.30% in February and 6.56% in January, marking a 1.98% year-over-year increase overall.
|
MoM change in delinquency rates (%) |
| Multifamily |
0.98 |
| Lodging |
0.76 |
| Retail |
0.33 |
| Industrial |
0.26 |
| Office |
— |
CMBS 1.0 vs CMBS 2.0+, what's the difference?
CMBS 1.0
Issued before the 2008 financial crisis, CMBS 1.0 was marked by higher loan-to-value ratios and lower debt service coverage ratios.
CMBS 2.0+
CMBS 2.0+ refers to the post-financial crisis generation of commercial mortgage-backed securities, designed to rebuild investor confidence. Key reforms include stricter underwriting standards, greater disclosure requirements, improved loan servicing practices and stronger risk retention rules aligned with Dodd-Frank regulations.
Residential Mortgage-backed Securities
2025 issuance in private label RMBS is up +18% compared to the same period last year.
RMBS Issuance ($B)
Key
Non-QM: Non-qualified mortgages
CAS/STACR: Connecticut Avenue Securities/Structured Agency Credit Risk
RPL/NPL: Re-performing loans/Non-performing loans
Non-Agency RMBS News
Historic deal in the mortgage industry
Rocket Companies is set to acquire Mr. Cooper, marking one of the largest transactions the mortgage industry has ever seen.
Buyers re-enter the market
Spring homebuying season is heating up — sales for the week ending 27 March jumped 38% YoY as more buyers return to the market.
More listings, but location still rules
Inventory is growing, giving buyers more choice, but location remains key. The Northeast and Midwest remain tight, while the Southeast and Southwest offer more negotiating room.
Home is where the heart is … for longer
The average homeowner tenure reached 11.8 years in 2024 — down from the 2020 peak (13.4 yrs) but nearly double 2005 levels (6.4 yrs), reflecting a long-term commitment to homeownership.
Sources: Deutsche Bank, Trepp, Barclays.
The views expressed are those of Diamond Hill as of April 2025 and are subject to change without notice. These opinions are not intended to be a forecast of future events, a guarantee of future results or investment advice. Investing involves risk, including the possible loss of principal. Past performance is not a guarantee of future results.