Composite Default Rates At Highest Level in Nearly a Year

S&P Dow Jones Indices and Experian, New York, said its Consumer Credit Default Indices jumped in December to its highest level since March, with the bank card default rate rising by 16 basis points.

The report said the composite default rate increased by two basis points from November to 0.91%. The first mortgage default rate also increased by two basis points to 0.68%. The bank card default rate rose by 16 basis points to 3.44%. The auto loan default rate fell one basis point from November to 1.10%.

All five major cities saw composite default rates rise in December. Chicago saw the largest increase, up six basis points to 1.15%. Dallas recorded a three basis point increase to 0.85%, while New York came in two basis points higher at 0.95%. Default rates for Los Angeles and Miami both rose one basis point from November, to 0.77% and 0.98%, respectively.

The report said the drop in the auto loan default rate marked the first monthly decrease since June. Bank card default rates, in contrast, recorded its largest monthly increase since May. Meanwhile, first mortgage default rates has been stable, remaining within a 20 basis point range for nearly two years.

“The default rate on bank cards has been rising consistently since December 2015,” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “Continued low unemployment and low inflation, rising home prices and stock market gains combined with gains in consumer confidence to support strong gains in retail sales in the last four months of 2017. However, the same expansion in consumer spending is now appearing in the bank card default data.”