While continuing to keep close tabs on how 60-day delinquencies are trending, Equifax is also watching write-offs, too, since they made a small move upward as of June.

According to data shared with SubPrime Auto Finance News this week, Equifax reported that write-offs increased slightly year-over-year, ticking up 4.0 percent in June to 19.0 basis points of balances outstanding. However, the latest reading extended a gradual descent each month since the recent high point of 22.2 basis points of outstanding balances registered last December. Those movements show the seasonality of this metric, Equifax deputy chief economist Dennis Carlson said.

“(Write-offs) have been increasing slightly. At this point, though, I’m not too concerned by it,” Carlson said. “I think it’s a trend that absolutely bears watching. We’re certainly nowhere near the levels we have been, especially on the auto finance side.

“I would be agree with the statement that to some degree it may be normalization,” he added.

That auto finance side Carlson mentioned is how Equifax breaks down its data, separating commercial banks from other companies that offer auto financing. Write-offs for just banks came in at 8.6 basis points of balances outstanding in June, 4.5 percent lower than a year earlier. But among finance companies — which include institutions holding much of the subprime paper being booked nowadays — write-offs stood at 31.3 basis points of outstanding balances, a mark 8.4 percent above the year-ago reading.

Before managers become too alarmed by the rise, Carlson offered some perspective.

“A better way to look at it, which is something we’ve done in the past, is to look a vintage level,” he said. “Is that rate increasing at the six-month mark? It could be very be the result of loans that weren’t made recently.

“We’re may be seeing a slight uptick because of loans perhaps made two years ago,” Carlson continued. “It’s something that bears watching. Obviously if it continues to climb, it would be something that would be very concerning. As it is today, it’s just a slight increase.”

Equifax also is watching what it calls serious delinquencies, contracts 60 days or more past due and perhaps destined for the repossession and recovery departments.

In June, overall 60-day delinquencies stood at 0.91 percent of the industry’s total portfolio, down 6 basis points from a year ago. For banks, the rate stayed nearly flat year-over-year at 0.36 percent. Meanwhile for finance companies, the reading actually dropped 7 percent from the year-ago level to settle at 1.59 percent.

Those serious delinquencies are “something that I’m looking at very carefully because to me it’s an early warning sign that something is happening,” Carlson said while adding that this is another metric where it’s more useful to compare year-over-year rather than sequentially.

“I like comparing that rate from a year-over-year perspective. I rarely look at month to month because there’s just a tremendous amount of seasonality. There’s a very seasonal pattern in terms of delinquency,” he continued. “When you look at year-over-year, I think it gives you a very good glimpse of where we are today.”