CHICAGO, IL--(Marketwire - Nov 21, 2011) - The national auto delinquency rate (the rate of borrowers 60 or more days past due) decreased on a year-over-year basis for the eighth consecutive quarter, dropping from 0.58% in Q3 2010 to 0.47% Q3 2011. However, auto delinquencies rose slightly for the quarter, moving up from 0.44% in Q2 2011. This is according to TransUnion and 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.
Although auto delinquencies were expected to rise slightly this quarter due in part to seasonal influences, the Q3 2011 TransUnion data released today continues 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," said 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. 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."
Between the second and third quarters of 2011, 15 states experienced decreases in their auto delinquency rates. On a more granular level, 54% of metropolitan statistical areas (MSA) saw increases in their delinquency rates last quarter. During the second quarter of 2011, 40% of MSAs experienced a rise in auto delinquency rates compared to only 36% in Q1 2011.
"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," added Turek. "Lenders, consumers, and dealers are expected to benefit during this period of gradual recovery and expansion. Barring any substantial changes in the macro economic environment, we see auto delinquency rates early next year remaining near current record lows. 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's 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.