Securitization in Focus — March 2026

Negative equity hits record levels

• More trade-ins are coming in underwater — borrowers owe more on their auto loan than the vehicle is worth (negative equity).
• J.D. Power estimates 30.5% of buyers with a trade-in are underwater, up 4.2% year over year and rising since 2022. A partial offset: the level remains below the 2019 pre-pandemic high of 33.6%.
• The average negative-equity balance is about $7,200, a record high. Edmunds reports 27% of underwater trade-ins carry $10,000+ in negative equity — also a record.
• The key impact is payment pressure: negative equity is often rolled into the new loan, increasing the financed balance. Edmunds estimates buyers who rolled negative equity paid an average of $916 per month in Q4 2025, a record and $144 above the average payment on all new-car purchases.
• Higher vehicle prices reinforce the cycle. With the average new-vehicle price near $50,000 (about 30% higher than February 2020), borrowers are extending loan terms — raising the likelihood that depreciation outpaces amortization.

Government-sponsored enterprise purchases rise, but 30Y mortgage rates move higher (%)

• Fannie Mae and Freddie Mac increased their mortgage holdings by $10.6B in February, up from $7.0B in January. Relative to the administration’s early-January request for roughly $200B of purchases, the pickup from January to February was modest.
• Mortgage rates initially drifted lower after the purchase announcement, bottoming near 6.10% in early March (Bankrate 30Y index). As Middle East conflict-related inflation concerns intensified, rates rose to about 6.50% late-month before easing slightly to 6.48% by March-end.

Geopolitical risk pushes spreads wider (bps)

Geopolitical uncertainty has contributed to wider spreads — the additional yield investors demand over Treasurys — amid concerns about commodity pricing, inflation and broader risk sentiment. Bloomberg index spreads across sectors illustrate the move since the conflict began.