Consumer Credit Default Rates Continue to Decrease Into the Year of 2012

By | May 18, 2012

(SOURCE S&P Indices) – Data through April 2012, released today by S&P Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults showed that, with the exception of bank cards, all loan types saw a decrease in default rates for the fourth consecutive month. In addition, the four that did decrease posted their lowest rates since at least the end of the recent economic crisis. The national composite declined to 1.86% in April from its 1.96% March rate. The first mortgage default rate decreased from March’s 1.88% to April’s 1.76%. The second mortgage default rate also declined from 1.03% in March to 0.93% in April. Auto loans default rate hit its lowest in its eight year history — 1.07% in April down from March’s 1.11%. Bank card was the only loan type where default rates increased marginally in April, to 4.49% from its 4.47% March level.

“April data show the continuation of the positive trend we saw in the first quarter of 2012,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “Not only have we continued the general downward trend in consumer default rates that began in the spring of 2009, but we appear to be reaching new lows across many of the loan types. The first four months of 2012 show broad based declines in default rates with first and second mortgage, auto and composite default rates all reaching new post-recession lows.

“The first mortgage default rate fell by 12 basis points in April over March and is the lowest rate since July 2007.  The second mortgage rate also fell during the month, by 10 basis points, and is at a seven-plus year low.  The auto loans default rate hits its lowest rate in our history of these data.  While the bank card rate rose, it was not by much and is still close to the recent low reported in February.

“Four of the five cities we cover saw their default rates drop, with all four at post-recession lows.  For the fourth consecutive month, Chicago saw a decline, moving from 2.84% back in December 2011 to 2.21% in April.  That’s a 0.63 percentage point decline and a new low. New York and Miami both fell for the third consecutive month. New York dropped almost a quarter percentage point over the month, from 2.01% in March to 1.78% in April. Miami decreased by almost a half a percentage point, from March’s 3.62% to April’s 3.14%.  While still the highest default rate, Miami hit a post-recession low.  Dallas hits its lowest rate in its eight years of history, moving from 1.44% in March to 1.25% in April and retains the lowest rate among the five cities we follow. Los Angeles is the only city where default rates remained flat, at 1.88%.”

The table below summarizes the April 2012 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

SOURCE S&P Indices

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