Auto loan delinquency rates rose slightly in the first quarter, but the pace of that growth slowed significantly from the past two years driven by improvements in oil states and a continued increase in prime originations, according to TransUnion.
The 60-day delinquency rate inched up to 1.32 percent in the first quarter, a 2 basis-point rise from the year earlier, according to TransUnion's first-quarter Industry Insights Report, published Tuesday.
In the first quarter of 2017, however, the delinquency rate increased 14 basis points to 1.3 percent. In the first quarter of 2016, it also rose 14 basis points to 1.16 percent.
Meanwhile, rising fuel prices drove delinquency rate improvements in oil-producing states, according to the report.
Gasoline prices have increased more than 21 percent in the last year, boosting the economies in states such as Wyoming, Texas, New Mexico, Alaska, Oklahoma and North Dakota, the report said.
"Two years ago, there was a material increase in the oil states, and we put two and two together," Brian Landau, automotive business leader at TransUnion, told Automotive News. "Right now we are starting to see fuel prices coming up. The loan performance is getting healthier."
Alaska saw the greatest reduction in delinquencies, improving 17basis points from the year earlier to 1.06 percent. The delinquency rate in Wyoming decreased 11 basis points to 1.04 percent, and the rate in Texas fell 9 basis points to 1.7 percent.
North Dakota has the lowest delinquency rate among the oil states at 0.8 percent in the first quarter, an improvement of 3 basis points.
Three states with the highest delinquency rate increases were Iowa, Rhode Island and Massachusetts. Iowa's delinquency rate increased 16 basis points to 1.1 percent, Rhode Island increased 15 basis points to 1.1 percent, and Massachusetts increased 12 basis points to 1.02 percent.
Auto loan originations, which TransUnion measures in one-quarter arrears to account for a reporting lag, dipped 1.5 percent to 6.6 million in the fourth quarter. Originations have continued to shift to prime borrowers, which is pushing down increases in delinquencies, Landau said.