An increase in delinquencies among subprime borrowers has beenthe primary driver behind a rise in the national auto loandelinquency rate.

According to TransUnion, that rate, which is the percentage of accounts thatare 60 or more days past due, increased slightly year over yearfrom 0.82% in the first quarter 2012 to 0.88% in the first quarterof 2013.

A rise in delinquencies for subprime borrowers from 5.09% in Q12012 to 5.50% in Q1 2013 was a primary driver of the increase, datafrom TransUnion's Industry Insights Report showed.

Still, while delinquencies are up, on a quarter-over-quarterbasis, the 60 or more days past due auto loan delinquency rate experienced a seasonal 12-basispoint drop from 1% in Q4 2012, according to TransUnion. Subprimeborrower accounts also saw a quarterly decline from 6.02% at theend of 2012.

TransUnion has been monitoring the auto loan landscape closelyfor some time to see if increased subprime lending would startpushing delinquency rates up, said Peter Turek, vice president ofautomotive for TransUnion.

“We found that while subprime borrowers are receiving more auto loans, thepercentage of these loans to all auto loans made remains the sameas last year so there has not been a dramatic effect to the overalldelinquency rate,” Turek noted.

TransUnion's analysis also found that subprime borrowers in Q12013 made up 15% of all auto loan accounts. This was the samepercentage as Q1 2012, and a much smaller percentage than what hasbeen observed in the last few years.

In contrast, auto loan account balances in the subprime categoryhave experienced a rise of 6.6% from $11,266 in Q1 2012 to $12,006in Q1 2013. In the past two years, balances for subprime consumershave increased more than 11%, according to TransUnion.

While the auto loan market has been performing exceptionallywell the last few years, there is some concern about the subprimemarket, Turek cautioned.

“On one hand, subprime borrowers make up a smaller percentage ofthe overall market and their delinquency rates are actually thesame as they were two years ago,” Turek explained. “However, theiraccount balances have risen more than $1,200 in that same periodplacing more of an economic burden on lenders if they were to godelinquent.”

For credit unions and other lenders, it means as the sheernumber of delinquent consumers rise, they will need to stay focusedon managing their portfolios, Turek offered.

“The increase in the number of auto loans points to the generalview that the auto finance market is performing quite well,” headded. “Although the current delinquency percentage is lower than2009 there are 82.7% more subprime loans originated now than in2009.”

The average auto loan account balances for the entirepopulation, while increasing for eight consecutive quarters, onlyrose 4% on a year-over-year basis from $12,755 in Q1 2012 to$13,260 in Q1 2013, according to TransUnion. The increase is 8% inthe last two years.

TransUnion surveyed credit unions at the CUNA Governmental Affairs Conference held in Washington inFebruary and found that most respondents saw auto loans as thebiggest opportunity to grow their loan portfolios.