Auto Loan Delinquencies Fall to 10-Year Lows

The national 60-day auto delinquency rate fell 17% during the first quarter of 2011 to 0.49%, according to TransUnion’s quarterly analysis of auto industry trends. That’s the lowest delinquency level since TransUnion began tracking this variable in 1999.

Compared to last year at this time, 60-day auto loan delinquencies have fallen 25.8%, from 0.66%.

“Continued improvement in auto delinquencies is a reflection of the stronger auto sales market,” says Peter Turek, automotive vice president in TransUnion’s financial services business unit. “As consumers' confidence in the economy improves, and with auto loan rates remaining at relatively low levels, more people are making auto purchases.

“Add to that the fact that consumers with auto loans are making timely payments and we’re seeing delinquency rates at record low levels,” he continues. “Due to these record low levels and the competitive landscape of the industry, auto lenders are now shifting their attention to marketing and growth strategies.”

Other key measures:

• National auto loan originations grew 22% year over year—the fifth-consecutive quarter of growth.
• Demand for auto loans, measured by TransUnion’s Auto Inquiry Index, increased 14% over the previous year. Forty-eight states experienced an increase in their Auto Inquiry Index compared to the previous year, while Hawaii, Tennessee, and District of saw decreases.
• States with the steepest quarterly increases in their Auto Inquiry Index were Washington (54.6%), Alaska (50%) and Vermont (43.9%).
• Average auto debt per borrower fell slightly during the first quarter, from $12,602 to $12,585. Year-over-year, auto debt edged up 0.67% during the first quarter of 2011.
• Average auto debt burdens were highest in the District of Columbia ($16,268), followed by Hawaii ($14,281). The lowest average auto debt per borrower was in Nebraska ($11,096).
• Forty-six states experienced a drop in their quarter-to-quarter delinquency rates, while only two states showed an increase on a year-over-year basis.
• Auto loan delinquency was highest in Mississippi and Louisiana (0.97% and 0.90%, respectively). The lowest auto loan delinquency rates were in Montana (0.21%), the District of Columbia (0.24%) and Wyoming (0.27%).

“Because of improving employment and consumer confidence, our forecast for the last quarter of 2011 suggests that the auto delinquency rate will continue to improve, declining 15% to 20% from today's rate,” Turek says.

Other loans

As with auto loans, the national mortgage delinquency rate decreased for the fifth consecutive quarter, dropping to 6.19% at the end of the first quarter in 2011.

The average national mortgage debt per borrower increased 0.6% to $190,115 from the previous quarter's $189,046. On a year-over-year basis, the first quarter 2011 average represents a 1.4% decrease over the first quarter 2010 level of $192,774.

On the plastic front, the national credit card delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their bank-issued credit cards) decreased to 0.74% in the first quarter of 2011. That’s down almost 10% since the fourth quarter of 2010 and nearly 33% year over year.

This is the lowest level reached since the third quarter of 1996 (0.76%).

In the first quarter of 2011, the average credit card debt per borrower fell 5.8% to $4,679 from $4,965 during the previous quarter. This is the lowest average since the third quarter of 2000 ($4,695) and is markedly lower than the peak experienced during the recession ($5,776 during first quarter 2009).