The number of subprime borrowers obtaining credit cards and auto loans continued to increase during the fourth quarter of 2015, causing a slight — but not yet significant — increase in delinquencies, TransUnion reported Wednesday.
The national consumer data firm said that at the conclusion of 2015, there were 1.26 million more subprime consumers carrying credit cards with outstanding balances than there were at the end of 2014. The company also reported there were 1.21 million additional subprime consumers with auto loans than at the end of 2014.
Auto loan delinquencies increased to 1.24% in Q4 2015, compared to 1.16% a year prior. Credit card delinquencies rose to 1.58%, the highest level since Q4 2012, when the rate was 1.62%.
"Overall, the consumer credit markets are performing well," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit. "It is a positive sign that delinquency levels have remained relatively low despite more borrowers receiving credit."
Becker said that lower energy prices and job losses in energy-related industries have begun having an impact on delinquency rates in several states. Credit card and auto loan delinquency rates experienced double-digit increases in such states as Louisiana, Oklahoma, North Dakota, Texas and West Virginia. And while mortgage delinquency rates decreased overall, the decreases were smaller in those states.
TransUnion reported the 60-day mortgage delinquency rate dropped 28% from 3.29% in the last quarter of 2014 to 2.37% in Q4 2015. That decline doubled the previous year's 14% decrease. It also was the largest annual drop the company has seen since the mortgage delinquency rate began to recover in 2010.
The company also reported the consumer lending delinquency rate dropped 2% from 3.95% in Q4 2014 to 3.87% at the end of 2015. At the same time, the average personal loan balance per consumer increased 2.4% — rising from $13,327 in Q4 2014 to $13,649 at the end of last year.
TransUnion reported that in Q4 2015, 75.6 million consumers carried an auto loan balance, up from 70.1 million in the fourth quarter of 2014.
"Originations and balances have grown to the level where they are outpacing auto sales as more consumers choose to finance rather than pay cash for their vehicle," Jason Laky, senior vice president and TransUnion's auto and consumer lending business leader, said.
The average balance for auto loan borrowers also continued to grow. In Q4 2015, it rose to $17,999, a 3.1% increase over the fourth quarter of 2014. Delinquency rates increased almost 7% to 1.24% during Q4 2015 as compared with the same time period in 2014, That was the highest level since the fourth quarter of 2010.
Laky attributed the increase to the growth in subprime borrowers and to states where the energy industry has a large impact on the economy.
"Lenders should be mindful of economic impacts and employment levels in regions of the U.S.," he added.
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