National Auto Loan Delinquency Rates Experience Seasonal Drop in First Quarter 2009: TransUnion

Chicago – TransUnion.com released today the results of its analysis of trends in the auto lending industry for the first quarter of 2009. 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) dropped slightly between the fourth quarter of last year and the first quarter of 2009 (0.86 percent to 0.83 percent). However, year-over-year the delinquency rate at the national level increased 27.69 percent in the first quarter.

Auto loan delinquency was highest in Mississippi at 1.49 percent, followed by Louisiana at 1.40 percent. The lowest auto loan delinquency rates were found in South Dakota (0.34 percent), North Dakota (0.35 percent) and Wyoming (0.44 percent). The largest improvements in delinquency from the previous quarter were found in South Dakota (45.16 percent decrease from 0.62 percent) and Vermont (33.3 percent decrease from 0.99 percent).

Average auto debt nationally continued to decrease slightly in the first quarter of 2009 from $12,713 to $12,596. Likewise, year-over-year auto debt fell by 1.85 percent. The state with the largest auto debt burden was Nevada at $15,080, followed by Texas at $14,748. The lowest average auto debt was in Nebraska at $10,629. The steepest annual increases in average auto debt as a percentage occurred in Michigan (+1.49 percent), New Jersey (+1.38 percent) and Rhode Island (+0.48 percent), while South Dakota experienced the sharpest drop in annual average auto debt (-4.61 percent) followed by Utah (-3.38 percent).

Analysis

The drop in the first quarter 60-day auto delinquency rate reflects more seasonal patterns rather than a reversal of the trends associated with the current lending environment. As in recent quarters, 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, putting  continued upward pressure on delinquency rates.

On a state-level basis, 27 states experienced a drop in their quarter-to-quarter delinquency rates while only one (South Dakota) showed a drop on a year-over-year basis. It is interesting to note the deteriorating risk environment has now affected even Alaska, which at the end of last year showed an extremely low auto delinquency rate of 0.19 percent. In the first quarter of 2008 Alaska’s delinquency rate increased by 247 percent quarter-to-quarter and 78 percent on a year-over-year basis—the largest increase for 2009.

“At end of the 2001 recession, the national auto delinquency rate increased to a high of just over 1 percent, and then began to edge downward for the next four or five years,” said Peter Turek, TransUnion’s automotive vice president. “As the recession came to a close in November of 2001, three of the five riskiest cities in the country were to be found in Texas: El Paso (5.00 percent), McAllen (2.46 percent), and Laredo (2.09 percent). In our current recession, Laredo is still leading in terms of auto delinquency (3.08 percent), but now is followed closely by metropolitan areas within the state of California such as Visalia (2.33 percent)—reflecting the impact of the housing market on that state’s economy. Today, the least risky metropolitan area is Corvallis, Ore., which shoulders an almost zero auto delinquency rate—a position consistent with what it held during the previous recession.”

Forecast

“TransUnion’s national 60-day auto delinquency rate forecast for the first quarter of 2009 was short by about 2 percent, as a slightly more favorable vision of the economic environment prompted some downward revisions to our forecast through the end of the year. Our current forecasting models indicate that the national 60-day auto delinquency rate will rise to about 1 percent by year-end, about the same level as that experienced at the end of our last recession,” continued Turek. “However, the overall economy, weak labor market and lower disposable income levels will continue to negatively impact the consumer well into 2010.”

At the state level, Mississippi is still anticipated to experience the highest delinquency rate by fourth quarter 2009 (1.94 percent), while South Dakota should prove to have the lowest level of auto delinquency (0.44 percent).

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

• Mortgage loan delinquency (the ratio of borrowers 60 or more days past due) increased for the ninth straight quarter, hitting a national average high of 5.22 percent for the first quarter of 2009. Traditionally seen as a precursor to foreclosures, this statistic is up almost 14 percent from the previous quarter’s 4.58 percent average.  This compares to an increase of 16 percent from the third to fourth quarter of 2008.  Year-over-year, mortgage loan delinquency is up approximately 62 percent (from 3.23 percent).
• The average national mortgage debt per borrower rose again (1.41 percent) to $195,500 from the previous quarter’s $192,789. On a year-over-year basis, the first quarter 2009 average represents a 1.87 percent increase compared to the first quarter 2008 average of $191,917.
• Average bankcard borrower debt (defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower) inched upward nationally 0.82 percent to $5,776 from the previous quarter’s $5,729, and 4.09 percent compared to the first quarter of 2008 ($5,548).
• Nationally, the bankcard delinquency rate (the ratio of bankcard borrowers 90 days or more delinquent on one or more of their bankcards) increased to 1.32 percent in the first quarter of 2009, up 9.1 percent over the previous quarter. Year over year, bankcard delinquencies increased 11 percent from 1.19 to 1.32 percent.

Additional information and statistics on the mortgage sector can be found at: http://newsroom.transunion.com/index.php?s=43&item=526

Additional information and statistics on credit card sector can be found at: http://newsroom.transunion.com/index.php?s=43&item=527

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