Fitch: US Credit Card ABS Staying Pat after Rate Decision
The Fed cited the growth of the job market as one of the factors leading it to leave rates unchanged. This suggests that ABS metrics will remain strong despite any potential or expected interest rate increases as job market strength will raise metrics more than any reasonable Fed policy will push them down.
The Fed's decision to leave rates unchanged support these metrics as they have retreated only slightly from record highs, and are more closely correlate with unemployment data. The unemployment rate dropped to 5.1% in August, a decline of 1.0% over the previous 12 months and a seven-year low.
We expect our prime indices to retreat slightly from their near records. Chargeoffs will rise while gross yield and monthly payment rates will decline slightly. However, we expect delinquency rates (60+ days) to remain unchanged.
Our retail metrics should see an increase in delinquencies. Fitch's other retail metric categories will be mixed, overall. We expect chargeoffs and MPR (a measure of how quickly cardholders pay back their balances) to decrease while gross yield will rise.
This preliminary data reflect the July reporting period (as of Aug. 31, 2015) and September distribution date. Actual results will be available in early October.
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