S&P/Experian: Default Rates Continue to Decrease

The S&P Dow Jones Indices and Experian, New York, said national default rates on three of four key measures fell slightly in September, with bank card default rates hitting a seven-month low.

The S&P/Experian Consumer Credit Default Indices said the composite default rate fell by one basis point to 0.84 percent; the first mortgage default rate also fell by one basis point, to 0.67 percent.

The auto loan default rate stood at 1.05 percent, up four basis points from August. The bank card default rate hit a seven-month low at 2.76 percent down 10 basis points from last month.

The report said four of the five major cities surveyed saw default rates decrease in September. Miami saw the largest decrease, reporting at 1.12 percent, down nine basis points from August. Chicago saw its default rate decrease by six basis points to 0.87 percent; New York reported a decrease at 0.86 percent, down five basis points. Los Angeles reported a default rate of 0.59 percent, down one basis point; Dallas was the only city unchanged from last month at 0.74 percent.

“Despite the continued growth in total consumer credit extended and the currently very low interest rates, we are not seeing any deterioration in consumer credit defaults,” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “Rather, the default rates for major categories and for the five cities highlighted in this report continue to drift down to the lowest figures seen in 12 years.”

The report said factors supporting favorable trends in consumer credit defaults are the economy’s underlying growth and continuing gains in employment, increases in personal income and low inflation. “A rare decline in mortgage debt outstanding and slower growth in consumer credit following the 2007-2009 recession contributed to improvements in consumers’ financial condition which has been sustained in the last few years,” Blitzer said.