Credit and information management firm TransUnion Tuesday reported that national delinquency rates for auto loans, mortgage loans and credit cards declined in the first quarter of fiscal 2010, compared with the fourth quarter of fiscal 2009. On a year-over-year basis, the delinquency rates were lower for auto loans and credit cards while it remained higher for mortgage loans.
The Chicago-based firm cited the entry of new, lower risk loans, as well as the improvements in economic factors and consumer confidence as the reasons for the turnaround in delinquency rates. TransUnion also expects the downward trend to continue in the second quarter.
Auto Loans
In the first quarter, the national 60-day auto delinquency rate, the ratio of auto loan borrowers 60 or more days past due, declined 18.52% to 0.66% from the fourth quarter of 2009. On a year-over-year basis, the delinquency rate in the first quarter was down 20.48% at the national level.
Peter Turek, automotive vice president in TransUnion's financial services group said, "The national trend we are now seeing points to a clear improvement in payment behavior."
Turek stated that improvements in economic factors such as consumer confidence and savings rates, which demonstrated consumers' willingness to focus on debt obligations, further energized the downward trend in loan delinquency rates in the first quarter.
TransUnion said its report was part of an ongoing series of quarterly consumer lending sector analyses focusing on credit card, auto loan and mortgage data available on its web site. The company gathered information for this analysis quarterly from approximately 27 million anonymous, randomly sampled, individual credit files, representing approximately 10% of credit-active U.S. consumers.
"On a state-level basis, 46 states experienced a drop in their quarter-to-quarter delinquency rates, while only 3 states showed an increase on a year-over-year basis," Turek noted.
According to the TransUnion report, Louisiana and Alabama had the highest auto loan delinquency rates at 1.20% and 1.13%, respectively. The lowest auto loan delinquency rates were in Alaska with 0.33%, North Dakota with 0.33% and Montana with 0.37%.
The report also said that sequentially, the largest improvements in delinquency were found in the District of Columbia with a 42.3% decrease from 1.18% in the forth quarter and in Utah with a decline of 37.8% compared with a decrease of 0.61% in the previous quarter.
Since the fourth quarter of 2009, only four states reported an increase in auto loan delinquency rates. Those were Alaska with a 13.8% increase, South Dakota with a 9.8% rise, Vermont with a 9.4% increase, and North Dakota with a 3.12% increase.
Further, TransUnion stated that average auto debt fell nationally to $12,501 from $12,568 in the fourth quarter. On a year-over-year basis, the decline in auto debt was 0.75% in the first quarter. The District of Columbia held the largest average auto debt burden at $14,911, followed by Wyoming at $14,579. Nebraska reported the lowest average auto debt at $10,781.
The regions with the steepest quarterly increases in average auto debt as a percentage were North Dakota, the District of Columbia and Wyoming. Alaska experienced the sharpest drop in average auto debt, followed by Tennessee.
TransUnion also said that national bank auto originations increased 5.4% year-over-year, with North Dakota recording the greatest rise, approximately 32%. On a regional basis, only eight states showed a drop in year-over-year originations.
Mortgage Delinquency
According to TransUnion, national mortgage loan delinquency rate, the ratio of borrowers 60 or more days past due, dropped to 6.77% in the first quarter, a decrease of 1.74% from the previous quarter's average of 6.89%. This decline was after steady increases for 12 consecutive quarters. The firm also said that this statistic is traditionally seen as a precursor to foreclosure. However, mortgage borrower delinquency remained up approximately 30% from 5.22% a year ago.
The average national mortgage debt per borrower decreased 0.47% in the first quarter to $192,774 from $193,690 in the prior quarter. On a year-over-year basis, the average national mortgage debt per borrower declined 1.39% from $195,500 in the first quarter of 2009.
Credit Cards
In addition, TransUnion's quarterly analysis of trends in the credit card industry revealed that the national credit card delinquency rate, the ratio of bankcard borrowers 90 days or more delinquent on one or more of their credit cards, decreased 8.3% sequentially to 1.11% in the first quarter of 2010. Year-over-year, credit card delinquencies were down 15.91%.
Average credit card borrower debt, the aggregate balance on all bank-issued credit cards for an individual bankcard borrower, drifted downward for the fourth consecutive quarter nationally by 4.95% to $5,165 from the previous quarter's $5,434. Compared with the year-ago quarter average credit card borrower debt of $5,776, the decline was 10.57%.
Outlook
Going ahead, TransUnion expects the national 60-day auto delinquency rate to continue to move downward in the second quarter, due to seasonal factors and general improvement in certain aspects of the economy.
The firm also expects a national 60-day auto delinquency rate in the range of 0.68% by year-end, considering the strong seasonal uptick in delinquency which is typical in the fourth quarter. The year-end estimate is also based on a more positive outlook in per capita disposable income and projected new vehicle sales.
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