CHICAGO—Delinquency rates for credit cards and auto loans are expected to increase in 2017, but the rise should not be considered a serious warning sign—yet, according to a new report.
TransUnion’s 2017 Consumer Credit Market Forecast forecasts that the combination of expected interest rate increases and more subprime borrowers in the consumer lending market will spur delinquency rate rises in 2017 for auto loans and credit cards.
TransUnion’s report also found that serious mortgage loan delinquency rates are expected to drop, while unsecured consumer loan delinquencies are expected to see only a minimal increase next year, the company reported.
“The consumer credit markets have been functioning extremely well the last few years, but an increase in subprime lending has begun to impact delinquency levels for some industries, specifically the auto finance and credit card markets,” stated Nidhi Verma, senior director of research and consulting in TransUnion’s financial services business unit. “On the credit card front, we have seen the percent of subprime accounts reach their highest level since the end of 2010; for auto finance, this figure is now at its highest point since the conclusion of 2013. Our forecast also takes into account an expected 50-basis-point aggregate increase in the prime interest rate beginning this December and continuing through the end of next year. The combination of these elements are key drivers of the expected delinquency rate increases.”