Delinquencies on subprime auto loans have risen to levels that are higher than before the financial crisis and aren’t rising at the same pace as loans to others, Citigroup analysts wrote in a report, without citing specific issuers.

"We are keeping a close eye on the deterioration," in subprime auto-loan performance, the analysts wrote.

Borrowers also are falling behind with sales of asset-backed securities tied to subprime auto loans surging as six years of near-zero interest rates pushes investors toward riskier assets. Concern is increasing that looser underwriting standards may prompt higher losses for bondholders.

The delinquency rate for debt packaged into bonds was up about 15% from a year earlier to 3.8$ in August, Citigroup reported. By contrast, 0.4% of borrowers with good credit are behind on payments.

Payments more than 60 days overdue averaged 3.3% in the 12 months ended in August, Citigroup reported.

Finance companies lowered their lending standards amid increased competition when new entrants jumped into the subprime auto market in recent years, according to Moody’s Investors Service.

Average credit scores declined, loan terms were stretched and down payments were reduced, Moody’s analysts said in a recent report. Lenders began pulling back and charging higher interest rates as losses climbed, according to Moody’s.

The rise in defaults ties in with increased regulatory scrutiny of the industry.

The Justice Department is investigating the underwriting criteria of Santander Consumer USA Holdings Inc. and General Motor Co.’s finance arm, the top issuers of securities linked to subprime auto loans, the companies announced in August.

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