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S&P/Experian: Auto Default Rate Registers Largest Increase Since December 2011


NEW YORK — Auto loan defaults in increased nine basis points from July to August, the largest month-over-month increase since December 2011, according to the S&P/Experian Consumer Credit Default Indices.

Despite the drop, the auto loan default rate remains low relative to historical levels. In fact, the rate is closer to levels recorded one year ago. The same is true for the composite rate for overall consumer defaults and first mortgage defaults, both of which increased three basis points from July.

“Overall, consumer credit defaults show no reason for alarm,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Defaults on first mortgages are flat to down while defaults on auto loans have risen slightly in recent months. Consumer credit defaults on bank cards continue their upward creep since the end of 2015 despite a recent drop. The combination of an improving labor market, low inflation, and low interest rates are the principal factors behind currently favorable consumer credit conditions.”

The bank card default rate fell 12 basis points from July to 3.19% — the lowest level since December 2016. Bank cards were the only loan type to register a decrease in August.

Out of the five major cities analyzed by S&P/Experian, three registered increases in their default rates in August. New York recorded the largest increase, up 13 basis points from July to 0.95%. Los Angeles reported a rate of 0.66% for August, up three basis points from the previous month. Chicago came in at 0.94%, up four basis points from July.

Dallas reported a decrease of three basis points from the previous month to 0.74%, while Miami’s rate fell 10 basis points from July to 1.13%.

“Some future developments could affect consumer credit defaults: Auto sales have fallen since December 2016 and are down 11%. Declining auto sales and the normal end-of-model year push to make room for new cars may encourage easier credit conditions and raise concerns about future defaults,” Blitzer noted. “Hurricane damage in Houston and across Florida is creating substantial financial stress. The impact on mortgages on damaged or destroyed homes is not yet clear. Job losses and rising spending needs could lead to increased consumer credit defaults in coming months.”

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S&P/Experian: Auto Default Rate Registers Largest Increase Since December 2011


NEW YORK — Auto loan defaults in increased nine basis points from July to August, the largest month-over-month increase since December 2011, according to the S&P/Experian Consumer Credit Default Indices.

Despite the drop, the auto loan default rate remains low relative to historical levels. In fact, the rate is closer to levels recorded one year ago. The same is true for the composite rate for overall consumer defaults and first mortgage defaults, both of which increased three basis points from July.

“Overall, consumer credit defaults show no reason for alarm,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Defaults on first mortgages are flat to down while defaults on auto loans have risen slightly in recent months. Consumer credit defaults on bank cards continue their upward creep since the end of 2015 despite a recent drop. The combination of an improving labor market, low inflation, and low interest rates are the principal factors behind currently favorable consumer credit conditions.”

The bank card default rate fell 12 basis points from July to 3.19% — the lowest level since December 2016. Bank cards were the only loan type to register a decrease in August.

Out of the five major cities analyzed by S&P/Experian, three registered increases in their default rates in August. New York recorded the largest increase, up 13 basis points from July to 0.95%. Los Angeles reported a rate of 0.66% for August, up three basis points from the previous month. Chicago came in at 0.94%, up four basis points from July.

Dallas reported a decrease of three basis points from the previous month to 0.74%, while Miami’s rate fell 10 basis points from July to 1.13%.

“Some future developments could affect consumer credit defaults: Auto sales have fallen since December 2016 and are down 11%. Declining auto sales and the normal end-of-model year push to make room for new cars may encourage easier credit conditions and raise concerns about future defaults,” Blitzer noted. “Hurricane damage in Houston and across Florida is creating substantial financial stress. The impact on mortgages on damaged or destroyed homes is not yet clear. Job losses and rising spending needs could lead to increased consumer credit defaults in coming months.”

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Auto Loan Default Rate Falls to Eight-Year Low


NEW YORK — The default rate for auto loans fell to its lowest level in eight years last month, according to the S&P/Experian Consumer Credit Default Indices.

Default rates for all loan types except bank cards fell for the fourth consecutive month, reaching their lowest levels since at least the end of the recent economic crisis. The national composite declined to 1.86 percent in April from its 1.96 percent March rate.

The rate of default for auto loans fell from 1.11 percent in March to 1.07 percent last month. The first mortgage default rate decreased from March’s 1.88 percent to April’s 1.76 percent, while the second mortgage default rate also declined from 1.03 percent in March to 0.93 percent. The default rate for bank cards increased marginally in April to 4.49 percent from its 4.47 percent March level.

“April data show the continuation of the positive trend we saw in the first quarter of 2012,” said 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 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 hit the lowest rate in the history of this data tracking. 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 the indices 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 percent back in December 2011 to 2.21 percent 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 percent in March to 1.78 percent, while Miami decreased by almost a half a percentage point from March’s 3.62 percent to April’s 3.14 percent.

“While still the highest default rate, Miami hit a post-recession low,” said Blitzer. “Dallas hits its lowest rate in its eight years of history, moving from 1.44 percent in March to 1.25 percent 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 percent.”

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Auto Loan Default Rate Declines in October, Reports S&P/Experian


NEW YORK — The default rate for auto loans declined 1.92 percent in October, the Standard & Poor’s/Experian Consumer Credit Default Indices revealed.

The S&P/Experian indices are a comprehensive measure of changes in consumer credit defaults. With data through October 2010, the indices showed a decline in monthly default rates for all credit lines, reported F&I and Showroom magazine.

First mortgages declined in October to 2.91 percent. Bank cards decreased slightly from 7.04 percent in September to 6.91 percent in October. Second mortgages had the largest decline in defaults this month, down 16.28 percent.

“Consumer credit default rates continued their decline across all major credit sectors and among all of the cities reported here. Bringing default incidence down to more normal levels is key step to increased credit use and further improvements in the economy. However, overall credit use through September, as reported by the Federal Reserve, shows that consumers are still reining in their borrowing,” says David M. Blitzer, managing director and chairman of the index committee for Standard & Poor’s. “The report is encouraging – declining consumer defaults should help restore confidence and spending as we enter the holiday season.”

Consumer credit defaults varied across major cities and regions of the U.S. Among the five major metropolitan statistical areas reported each month in this release, New York had the largest monthly decrease in defaults, 12.51 percent, followed by Los Angeles which declined by 8.49 percent. Miami and Chicago experienced similar declines of 7.47 percent and 7.85 percent respectively. Dallas declined slightly month over month, by 0.51 percent.

The table below gives summary results for October 2010 for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

S&P/Experian Consumer Credit Default Indices

National Indices

Index October Index Level

Change from September 2010

Change from October 2009

Composite

3.03

-3.60%

-36.26%

First Mortgage

2.91

-3.36%

-38.15%

Second Mortgage

1.79

-16.28%

-48.12%

Bank Card

6.91

-1.84%

-16.41%

Auto Loans

1.92

-5.84%

-29.73%

Source: S&P/Experian Consumer Credit Default Indices

Data Through: October 2010

The second table below provides the S&P/Experian Consumer Default Composite Indices for five selected metropolitan statistical areas:

Metropolitan Statistical Area

October Index Level

Change from September 2010

Change from October 2009

New York

2.79

-12.51%

-37.96%

Chicago

3.28

-7.85%

-31.46%

Dallas

2.26

-0.51%

-37.30%

Los Angeles

3.78

-8.49%

-52.77%

Miami

7.03

-7.47%

-45.65%

Source: S&P/Experian Consumer Credit Default Indices

Data Through: October 2010

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