TransUnion: Delinquencies Decrease Year-Over-Year for Eighth Consecutive Quarter

CHICAGO — TransUnion discovered the national auto delinquency rate — frequency of borrowers 60 or more days past due — decreased on a year-over-year basis for the eighth consecutive quarter.

Analysts revealed Monday that the third-quarter rate dropped to 0.47 percent from 0.58 percent in the year-ago quarter.

However, they pointed out delinquencies rose slightly for the quarter, moving up from 0.44 percent from the second quarter.

Although auto delinquencies were expected to rise slightly this quarter due in part to seasonal influences, TransUnion said its third-quarter data continued to show a moderate deceleration on a year-over-year basis since the third quarter of 2010.

"Increases in third-quarter delinquency rates from the quarter before have been the rule rather than the exception, even today. In fact, third-quarter rates have consistently been greater than second-quarter rates since 2000 — primarily due to seasonal influences," explained Peter Turek, automotive vice president in TransUnion's financial services business unit.

"The number of new auto loans coming on the books has continued trending upward since the end of the recession," Turek continued.

"A primary driver of this is relaxed lending policies of creditors. However, on a year-over-year basis, delinquencies have now dropped for eight consecutive quarters even in the face of increased lending to the subprime market," he went on to say.

Between the second and third quarters, TransUnion discovered 15 states experienced decreases in their auto delinquency rates.

On a more granular level, analysts noted 54 percent of metropolitan statistical areas saw increases in their delinquency rates last quarter. During the second quarter, 40 percent of MSAs experienced a rise in auto delinquency rates compared to only 36 percent in the first quarter.

"The good news is that national auto delinquency rates are still at historic lows and should remain so this year as the demand forecast for new and used vehicles indicates continued growth," Turek emphasized.

"Lenders, consumers and dealers are expected to benefit during this period of gradual recovery and expansion," he surmised.

"Barring any substantial changes in the macroeconomic environment, we see auto delinquency rates early next year remaining near current record lows," Turek projected. "However, there is some upward pressure building on delinquency rates as long periods of high unemployment and low consumer sentiment take their toll on consumers."

TransUnion highlighted these findings as a part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgage, credit cards and auto loans.

TransUnion reiterated its forecast is based on various economic assumptions, such as unemployment rates, consumer sentiment, disposable income and interest rates.

"The forecast changes as the economy deviates from a conservative economic forecast or if there are unanticipated shocks to the economy affecting recovery," analysts pointed out.