Most Consumer Credit Default Rates Hit New Lows in September 2012


Data through September 2012, released today by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed that most loan types saw a decrease in default rates, including the national composite’s ninth consecutive monthly decline.

Four of the five loan types posted their lowest rate since the end of the 2007/2009 recession. Only the auto loan default rate increased, from 1.09% in August to 1.11% in September. The bank card default rate fell in September to 3.70%, from August’s 3.77%, and the first mortgage default rate decreased from 1.40% in August to 1.36% in September, both hitting post-recession lows. At 0.64%, the second mortgage default rate fell to the lowest in its eight-plus year history. The composite index fell to a post-recession low of 1.46%, down from August’s 1.50%.

“We think it is very fair to say that 2012 has proven to be a period of financial repair for consumers,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices. “Consumers’ financial condition continues to improve as witnessed by these declining credit default rates.

“Only the auto loan rate rose in September, up two basis points to 1.11%. This is still a decent number, as the historic low for such loans was 1.01% posted just two months ago in July. Bank card, first and second mortgage and composite default rates hit new post-recession lows. The first mortgage default rate has been down or flat for nine consecutive months, another positive housing market statistic.  The second mortgage default rate hit the lowest rate in its eight-year history, 0.64%.

“All five cities we cover showed a decrease in their default rates; and three of them hit the post-recession lows – Chicago, New York and Los Angeles. Chicago’s rate was 1.82% in September, down from 1.92% in August. Los Angeles saw a second consecutive monthly decrease, down to 1.45% in September, from August’s 1.60%. New York’s default rate fell the most. The 1.28% September rate was down 21 basis points from August’s rate. While not quite at post-recession lows, Dallas and Miami rates are close to them. Dallas’ September rate was 1.03%, down four basis points from August; and it has the lowest default rate of the five cities we publish. Miami’s rate fell by 14 basis points to 2.48% in September. Again, not a new low, but an incredibly good number when you compare it to the 18.89% rate witnessed in May 2009.

“There is no doubt that from a borrowing perspective the consumer is in a much better place than two or three years ago.  We have seen broad-based declining trends in default rates through all of 2012, and all markets and loan types are at or near pre-recession lows.  For some of these markets, such as Miami, the difference in the past three years has been quite extraordinary.”

The table below summarizes the September 2012 results 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 September 2012
Index Level
August 2012
Index Level
September 2011
Index Level
 Composite 1.46 1.50 2.10
 First Mortgage 1.36 1.40 1.99
 Second Mortgage 0.64 0.72 1.32
 Bank Card 3.70 3.77 5.36
 Auto Loans 1.11 1.09 1.29
                             Source: S&P/Experian Consumer Credit Default Indices
                             Data through September 2012

The table below provides the S&P/Experian Consumer Default Composite Indices for the five MSAs:

Metropolitan
Statistical Area
September 2012
Index Level
August 2012
Index Level
September 2011
Index Level
New York 1.28 1.49 2.01
Chicago 1.82 1.92 2.47
Dallas 1.03 1.07 1.33
Los Angeles 1.45 1.60 2.12
Miami 2.48 2.62 4.59
                             Source: S&P/Experian Consumer Credit Default Indices
                             Data through September 2012

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