TransUnion.com: National Auto Loan Delinquency Rates Increased in Q2

TransUnion.com released today the results of its analysis of trends in the auto lending industry for the second 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.

Statistics

The national 60-day auto delinquency rate (the ratio of auto loan borrowers 60 or more days past due) changed little between the first and second quarter of 2008, increasing from 0.65 percent to 0.68 percent. The delinquency rate increased 11.5 percent from the second quarter of 2007 (0.61 percent).

Auto loan delinquency was highest in the District of Columbia at 1.41 percent, followed by Mississippi at 1.25 percent. The lowest auto loan delinquency rates were found in Alaska (0.22 percent), North Dakota (0.30 percent) and Wyoming (0.41 percent). The largest improvements in delinquency from the previous quarter were found in Alaska (40 percent decrease from 0.37 percent), New Hampshire (35 percent decrease from 0.65 percent) and Wisconsin (18 percent decrease from 0.55 percent).

Average auto debt nationally increased in the second quarter of 2008 to $12,869 from an average of $12,833 in the previous quarter. Year-over-year, auto debt increased 1.9 percent from an average of $12,630. The largest state average was in Nevada at $16,033 followed by the District of Columbia at $15,369. The lowest average auto debt was in Nebraska at $10,681. The steepest increases in average auto debt occurred in Maine (3.2 percent growth), North Dakota (2.9 percent) and West Virginia (2.4 percent), while Louisiana experienced the sharpest drop in average auto debt (-1.6 percent) followed by New Hampshire (-1.2 percent).

Analysis

"The availability of home equity for financing auto purchases has diminished significantly in states like Nevada and Arizona, thus contributing to higher overall average auto loan debt," said Peter Turek, automotive vice president in TransUnion’s financial services group. "While the statistics show a slight increase in 60-day delinquency rates, some states that in recent years have had some of the highest rates, like Louisiana and Alabama, have shown a decrease over the prior quarter, a possible indication of achieving economic stability in the aftermath of Hurricane Katrina."

Forecast

TransUnion expects a continued rise in average auto debt as consumers seek a solution to higher energy prices. One such solution could involve consumers trading out of vehicles that have lost value or have lower payments for newer, more fuel-efficient cars, thereby leading to higher overall debt as the new auto loans will be further from their respective payoff dates.

"Our current forecasting models indicate that the national 60-day auto delinquency rate is expected to gradually rise from a value of 0.68 percent in the second quarter of 2008 to 0.85 percent by year end," added Turek. "This increase is primarily attributed to seasonality effects in auto loan delinquency, trends in disposable income, and a continued slowdown in the general economy."

As for state projections, the District of Columbia (1.6 percent) is anticipated to experience the highest delinquency rate by fourth quarter 2008, while Alabama (0.28 percent) should prove to have the lowest level of delinquency.

Overview of U.S. Consumer Credit Status — 2nd Quarter 2008

Automotive delinquency statistics, coupled with mortgage and bankcard delinquency information released earlier this month on TransUnion.com, present an overarching credit picture of the U.S. consumer in the 2nd quarter of 2008 and highlight geographic areas of concern. Statistics of note and forecasts for the mortgage and bank card sectors were as follows:

• The national average mortgage loan delinquency rate (the ratio of borrowers 60 or more days past due) increased for the sixth straight quarter, hitting a high of 3.53 percent for the second quarter of 2008. This statistic is up more than nine percent from the previous quarter’s 3.23 percent average. The year-over-year mortgage delinquency rate increased more than 50 percent.

• Mortgage borrower delinquency rates in the second quarter of 2008 were highest in Nevada (6.63 percent) and Florida (6.47 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.10 percent), South Dakota (1.50 percent) and Montana (1.54 percent).

• The national 60-day mortgage delinquency rate is expected to continue to rise throughout 2008 from a value of 3.53 percent in the second quarter of 2008 to just over 4 percent by year-end.

• The national average credit card debt per credit card borrower increased 2.63 percent from the previous quarter’s $1,673 total to $1,717. The year-over-year credit card debt increased 8.6 percent.

• The steepest increases in average credit card debt over the previous quarter occurred in the District of Columbia (6.62 percent), Alaska (4.84 percent) and Tennessee (4.75 percent).

• Nationally, the ratio of credit card borrowers delinquent on one or more of their credit cards declined to 1.04 percent in the second quarter of 2008, down 12.6 percent over the previous period. However, year-over-year the credit card delinquency rate increased 14.3 percent.

• Credit card delinquency was highest in Nevada (1.72 percent), followed closely by Florida (1.34 percent) and Mississippi (1.30 percent). The lowest credit card loan delinquency rates were found in North Dakota (0.59 percent), Vermont (0.68 percent) and Utah (0.70 percent).

Additional information and statistics on the mortgage sector can be found at: http://newsroom.transunion.com/index.php?s=43&item=490

Additional information and statistics on the bankcard sector can be found at: http://newsroom.transunion.com/index.php?s=43&item=492

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, 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 more than 3,600 employees in more than 25 countries on five continents. http://www.transunion.com