In 2018, delinquencies will tick up, lenders will continue to tighten their standards, and the industry will rely more on alternative data, TransUnion predicts.
In the third quarter of this year, there was a "pullback in subprime and near-prime, and to some extent prime, and a greater focus on prime-plus and superprime. You see a mix shift happen," Brian Landau, TransUnion's auto line of business leader, told Automotive News.
A rise in prime financing will "cushion some of these delinquencies going forward," he said.
In the fourth quarter, the average 60-day delinquency rate likely will rise to 1.43 percent, up from 1.4 percent in the third quarter, TransUnion said in a statement detailing its 2018 consumer lending forecast. In the fourth quarter of 2018, TransUnion expects the delinquency rate to rise slightly to 1.46 percent, which is still below the 1.59 percent recorded in the fourth quarter of 2009.
In 2015-16, delinquency rates grew by double digits, but that pace leveled off. Year over year, the delinquency rate has increased 3 basis points, Landau said.
"We feel good that that will be the case going forward," he said.