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Auto, mortgage, credit card delinquencies decline as economy dumps doldrums

by Broderick Perkins

(05/28/2010) If first quarter improvements in consumer loan delinquencies are any indication, economic growth should continue to accelerate, albeit slowly.

TransUnion, one of the big three credit reporting agencies recently reported delinquency declines in the big three consumer credit categories -- auto loans, mortgages and credit cards.

The auto loan delinquency rate -- the ratio of borrowers at least 60 days overdue -- continued to hit the brakes in the first quarter of 2010, slowing to 0.66 percent.

The delinquency rate fell 18.52 percent from the fourth quarter of 2009, and 20.48 percent from the first quarter of 2009.

Average auto debt nationally also fell slightly from the fourth quarter, from $12,568 to $12,501. Year-over-year, auto debt fell by 0.75 percent in the first quarter.

"The national trend we are now seeing points to a clear improvement in payment behavior," said Peter Turek, automotive vice president in TransUnion's financial services group.

Less risky loans are helping too.

"As we noted last quarter, part of the reason for the turnaround in delinquency rates is the influx of new, lower risk loans. Furthermore, this downward trend was energized by first quarter improvements in economic factors," Turek said.

On a year-over-year basis, national bank auto originations increased by 5.4 percent. On a regional basis, only eight states showed a drop in year-over-year auto loan originations.

Mortgage, credit card delinquencies down too

The worst could be over for housing as the national mortgage loan delinquency rate (the ratio of borrowers 60 or more days past due) also decreased in the first quarter of 2010 -- for the first time in 12 consecutive quarters.

The mortgage delinquency rate dropped to 6.77 percent, a decrease of 1.74 percent decline from the previous quarter's 6.89 percent average. Year over year, mortgage borrower delinquency remains up 30 percent from 5.22 percent a year ago, TransUnion reported.

The average national mortgage debt per borrower decreased 0.47 percent to $192,774, from the previous quarter's $193,690. On a year-over-year basis, the first quarter 2010 average represents a 1.39 percent decrease over the first quarter 2009 average mortgage debt per borrower level of $195,500.

There's also good news from the credit card sector.

TransUnion said 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 to 1.11 percent in the first quarter of 2010, down 8.3 percent over the previous quarter. Year over year, credit card delinquencies fell by 15.91 percent.

Average credit card borrower debt (defined as 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 percent to $5,165 from the previous quarter's $5,434, and down 10.57 percent compared to the first quarter of 2009 ($5,776).

TransUnion's analysis is taken randomly from about 27 million credit files representing 10 percent of credit-active U.S. consumers.

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