Quickening originations sparked a dip in new-auto loan delinquencies in the fourth quarter of 2011, bucking historical trends. The fourth quarter of 2011 was only the third time in the past decade that year-over-year national auto delinquency rates did not record a seasonal rise, according to TransUnion data released yesterday.
“Except in 2009 where there was no change and in 2003 where there was about a 4% drop, auto delinquency rates have shown upward movements between third and fourth quarters averaging in excess of 5%,” said Peter Turek, automotive vice president in TransUnion’s financial services business unit. “Ending the year flat is particularly interesting, because the number of new auto loans coming onto the books has consistently increased since the end of the recession, a primary driver of which has been an expansion in lending to consumers in the subprime market.”
According to TransUnion’s quarterly analysis of credit-active U.S. consumers, the national auto delinquency rate of borrowers 60 or more days past due decreased on a year-over-year basis for the ninth consecutive quarter, dropping to 0.46% in 4Q11 from 0.59% in 4Q10. On a quarter-over-quarter basis, auto delinquencies remained essentially flat, falling 1 basis point.
In its annual national auto delinquency forecast, TransUnion did indeed predict that the ratio of borrowers 60 or more days past due would remain the same between the end of 2011 and 2012. Sixty-day auto loan delinquencies are expected to decrease in the first two quarters of 2012 before rising back to 0.51% by yearend, finishing at the same rate as at yearend 2011.
About half of the nation’s states and 44% of metropolitan statistical areas (MSAs) saw increases in their auto delinquency rates between 3Q11 and 4Q11. By comparison, 54% of MSAs experienced a rise in auto delinquency rates in 3Q11 and 40% did so in 2Q11.
As national auto delinquency rates continue to remain at historic lows, Turek predicts it will remain that way as the demand for new and used vehicles strengthens. “Even without a robust economic recovery, auto loan delinquencies have remained low, and we anticipate that an improving economy in 2012 will allow delinquencies to stay around their current levels.”