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Auto Delinquency Rates Up Over 17 Percent in Third Quarter – TransUnion
Credit bureau TransUnion today released its quarterly analysis of trends in the auto lending industry.
Quarterly analysis for dealers
According to credit bureau TransUnion, the credit market continues to be a challenging one for lenders and those of us here at Auto Credit Express wanted our dealers to be aware of the latest news:
CHICAGO, Dec. 15 – TransUnion.com released today the results of its analysis of trends in the auto lending industry for the third quarter of 2008. The report is part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data that may be found on TransUnion’s Web site.
Statistics
The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) increased between the second and third quarter of 2008 from 0.68 percent to 0.80 percent. Year-over-year the delinquency rate increased 15.9 percent in the third quarter.
Auto loan delinquency was highest in Mississippi at 1.46 percent, followed by Louisiana at 1.41 percent. The lowest auto loan delinquency rates were found in Wyoming (0.29 percent), North Dakota (0.36 percent) and South Dakota (0.46 percent). The largest improvements in delinquency from the previous quarter were found in Wyoming (29 percent decrease from 0.41percent) and South Dakota (16 percent decrease from 0.55 percent).
Average auto debt nationally decreased slightly in the third quarter of 2008 from $12,869 to $12,861. Year-over-year auto debt increased 1.1 percent. The state with the largest auto debt burden was in Nevada at $15,773 followed by the District of Columbia at $15,433. The lowest average auto debt was in Nebraska at $10,944. The steepest increases in average auto debt as a percentage occurred in Iowa (3.2 percent growth), Nebraska (2.5 percent) and Wisconsin (2.2 percent), while Utah experienced the sharpest drop in average auto debt (1.7 percent) followed by Nevada (-1.6 percent).
Analysis
In addition to the seasonality effect of auto loan delinquency, the third quarter 60 day auto delinquency rate reflects the current lending environment. Both the availability of funding (liquidity crisis) in the market for auto loans and tighter lending standards have significantly decreased the number of auto loans in the market, resulting in higher delinquency rates as a ratio of all auto loans.
Thirty states experienced a lower year-over-year delinquency rate change compared to the 15.9 percent increase seen nationally overall. Eleven states reflected a decrease in the 60-day auto delinquency year-over-year in the third quarter of 2008.
Forecast
“Our current forecasting models indicate that the national 60-day auto delinquency rate is expected to rise from a value of 0.80 percent in the third quarter of 2008 to 0.88 percent by the end of this year,” said Peter Turek, automotive vice president in TransUnion’s financial services group. “The overall economy, weak labor market and lower disposable income levels continue to negatively impact the consumer.”
As for state projections, Mississippi (1.9 percent) is anticipated to experience the highest delinquency rate by fourth quarter 2009, while Wyoming (0.42 percent) should prove to have the lowest level of delinquency.
Overview of U.S. Consumer Credit Status - 3rd Quarter 2008
Automotive delinquency statistics, coupled with mortgage and bankcard delinquency information released earlier this month on TransUnion.com, present an overarching credit picture of the U.S. consumer in the 3rd quarter of 2008 and highlight geographic areas of concern. Statistics of note and forecasts for the mortgage and bank card sectors were as follows:
Mortgage loan delinquency (ratio of borrowers 60 or more days past due) increased for the seventh straight quarter, hitting a national average high of 3.96 percent for the first nine months of 2008 and a staggering 54 percent higher than the same period last year. Mortgage borrower delinquency rates in the third quarter of 2008 were highest in Florida (7.82 percent) followed closely by Nevada (7.71 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.35 percent), South Dakota (1.6 percent) and Montana (1.71 percent). Average national mortgage debt per mortgage borrower rose slightly (0.2 percent) to $192,287 from the previous quarter’s $191,681.
Average national mortgage debt dropped 3.45 percent year over year, compared to $199,168 in the third quarter of 2007.Average bank card borrower debt increased to $5,710, a 1.57 percent increase from the previous quarter’s $5,621. The average remains 6.0 percent higher than the same period last year ($5,387). The steepest increases in average bank card debt over the previous quarter occurred in Wyoming (4.96 percent), Delaware (4.12 percent) and Arizona (3.12 percent). Maine experienced the largest drop in its average active bankcard balance (-1.4 percent), followed by North Dakota (-1.12 percent) and Alaska ( 0.57 percent).Nationally, the ratio of credit card borrowers delinquent on one or more of their credit cards increased to 1.09 percent in the third quarter of 2008, up 4.8 percent over the previous quarter. On a year-over-year basis, the national delinquency incidence rate has risen 5.8 percent from 1.03 percent in the third quarter of 2007.
TransUnion’s Trend Data Database
The source of the underlying data used for this analysis is TransUnion’s Trend Data, a one-of-a-kind database consisting of 27 million anonymous consumer records randomly sampled every quarter from TransUnion’s national consumer credit database. Each record contains more than 200 credit variables that illustrate consumer credit usage and performance. Since 1992, TransUnion has been aggregating this information at the county, Metropolitan Statistical Area (MSA), state and national levels.
The Bottom Line
Here at Auto Credit Express, we want our dealers to be aware of what’s happening behind the hype and the headlines in today’s economic climate.