TransUnion’s Industry Insights Report offered clear evidence that auto finance originations are slowing, especially in the subprime space.

The credit bureau’s report, powered by Prama analytics and released on Tuesday, indicated that auto finance originations, viewed one quarter in arrears, declined to 6.66 million to end 2016, down 0.2 percent relative to fourth quarter of 2015. This movement marks the second consecutive quarter in which total originations were down year-over-year.

Analysts found that subprime originations posted the steepest decline in originations, dropping by 5 percent.

The latest Industry Insights Report also highlighted that outstanding auto finance balances continued to grow at a more moderate pace in the first quarter of 2017. Total auto finance balances reached $1.12 trillion, up from $1.05 trillion in Q1 2016. 

The year-over-year growth rate in Q1 2017 was 7.3 percent, the lowest level TransUnion has observed since Q2 2012.

Analysts determined the average auto finance balance per consumer rose to $18,386, up 1.8 percent from $18,065.

TransUnion reported the auto finance delinquency rate increased from 1.16 percent in Q1 2016 to 1.30 percent in Q1 2017, driven by poorer payment performance in the subprime and near prime segments.

“Serious auto loan delinquency rates are approaching levels not seen since the recession, but it’s important to understand that delinquencies in the auto market never elevated to levels observed for other key credit products such as credit cards and mortgages,” said Brian Landau, senior vice president for financial services and automotive business leader for TransUnion.

“Regardless, with flatter sales volumes and higher delinquencies, we anticipate lenders will evaluate their credit policies for subprime and near prime borrowers to calibrate for the uptick in delinquencies,” Landau continued.

As Landau referenced, similar trends are appearing in other credit segments that TransUnion watches as analysts mentioned personal loan balances grew while subprime originations slowed.

TransUnion said the total balance for unsecured personal loans grew 9.7 percent to $102 billion in Q1 2017. One year prior, personal loan balances were $93 million. The year-over-year growth rate slowed compared to prior first quarters, when the yearly growth rate averaged 19.9 percent between 2013 and 2016.

Analysts calculated the average personal loan balance was $7,603 in the first quarter, a slight increase from $7,544 in Q1 2016. In the last five years, personal loan balances have grown by $1,709 from $5,893 in Q1 2012.

“Personal loan balances have increased rapidly in the last five years, but we observed a slowdown in the growth of both total balances and average balances in the first quarter,” said Jason Laky, senior vice president and consumer lending business leader at TransUnion.

“While the first quarter is usually lighter volume for personal loans, as consumers use tax returns or bonuses for purchases and to pay down debts, the beginning of 2017 experienced a larger than normal decline,” Laky added.

At the end of 2016, personal loan originations, viewed one quarter in arrears, declined 10.8 percent from 4.10 million in Q1 2016 to 3.66 million in Q1 2017. Subprime (down 12.6 percent) and near-prime (down 13.5 percent) originations experienced the sharpest year-over-year drops in originations.

TransUnion went on to note the personal loan delinquency rate also ticked up slightly to open 2017. The delinquency rate was 3.72 percent, a 3.6-percent increase from the year-ago reading of 3.59 percent.