National Auto Loan Delinquency Rates Increase 7 Percent To Close 2008: TransUnion

Chicago – TransUnion.com released today the results of its analysis of trends in the auto lending industry for the fourth 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. Information for this analysis is culled quarterly from approximately 27 million anonymous, individual credit files, providing a real-life perspective on how U.S. consumers are managing their credit health.

Statistics

The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) edged upward between the third and fourth quarter of 2008 from 0.80 percent to 0.86 percent. Year-over-year the delinquency rate increased 8.86 percent in the fourth quarter.

Auto loan delinquency was highest in Mississippi at 1.62 percent, followed by California at 1.46 percent. The lowest auto loan delinquency rates were found in Alaska (0.19 percent), North Dakota (0.34 percent) and Montana (0.41 percent). The largest improvements in delinquency from the previous quarter were found in Alaska (60 percent decrease from 0.47 percent) and Montana (11 percent decrease from 0.46 percent). These large decreases were primarily due to the fact that delinquency in those states was so low to begin with.

Average auto debt nationally continued to decrease slightly in the fourth quarter of 2008 from $12,861 to $12,713. Year-over-year auto debt also fell (0.2 percent). The state with the largest auto debt burden was in Nevada at $15,225, followed by the Texas at $14,848. The lowest average auto debt was in Nebraska at $10,685. The steepest increases in average auto debt as a percentage occurred in Vermont (2.2 percent growth), South Dakota (1.5 percent) and Delaware (0.62 percent), while the District of Columbia experienced the sharpest drop in average auto debt (-5.0 percent) followed by Iowa (-3.8 percent).

Analysis

In addition to seasonality dependencies, the fourth 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. However, 14 states experienced a drop in their year-over-year delinquency rates compared to the 8.86 percent increase seen nationally. Eleven states experienced a decrease in the 60-day auto delinquency from third quarter of 2008.

“How does the rise in auto delinquency compare to the 2001 recession?” asked Peter Turek, automotive vice president in TransUnion’s financial services group. “Although that recession was short by most standards (beginning in March of 2001 and ending in November of the same year), the auto delinquency ratio increased by almost 10 percent. In contrast, in our current recession which began in December of 2007, we see that the auto delinquency rate has already increased by 25 percent—more than double what occurred in the last recession, with an endgame that is still uncertain.”

Forecast

“Although our national forecast for the fourth quarter of 2008 only missed the true 60-day auto delinquency rate by about 2 percent, the worsening economic environment prompted a revision to our long-term forecasts. Our current forecasting models indicate that the national 60-day auto delinquency rate will rise from a value of 0.86 percent in the fourth quarter of 2008 to over one percent by the end of this year,” continued Turek. “The overall economy, weak labor market and lower disposable income levels continue to negatively impact the consumer.”

As for state projections, Mississippi is still anticipated to experience the highest delinquency rate by fourth quarter 2009 (2.1 percent), while Alaska should prove to have the lowest level of delinquency (0.27 percent).

Overview of U.S. Consumer Credit Status – Fourth Quarter 2008

Mortgage loan delinquency (ratio of borrowers 60 or more days past due) increased for the eighth straight quarter, hitting a national average high of 4.58 percent for the fourth quarter of 2008. Traditionally seen as a precursor to foreclosures, this statistic is up almost 16 percent from the previous quarter’s 3.96 percent average and up approximately 53 percent from the same period last year (2.99 percent).
 
The average national mortgage debt per borrower rose slightly (0.26 percent) to $192,789 from the previous quarter’s $192,287 total. On a year-over-year basis, the fourth quarter 2008 average represents a 0.74 percent increase compared to the fourth quarter 2007 average of $191,370.

• Average bankcard borrower debt (defined as the total bankcard debt per bankcard borrower) inched upward nationally 0.33 percent to $5,729 from the previous quarter’s $5,710, and 1.96 percent compared to the fourth quarter of 2007 ($5,619).

• Nationally, the ratio of bankcard borrowers delinquent on one or more of their bankcards increased to 1.21 percent in the fourth quarter of 2008, up 11 percent over the previous quarter. However on a positive note, on a year-over-year basis the national delinquency incidence rate has actually fallen 11.0 percent from 1.36 percent in the fourth quarter of 2007.

Additional information and statistics on the mortgage sector can be found at:

http://newsroom.transunion.com/index.php?s=43&item=502

Additional information and statistics on the bankcard sector can be found at:  

http://newsroom.transunion.com/index.php?s=43&item=504

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.

About TransUnion
As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion employs associates in more than 25 countries on five continents. www.transunion.com/business