Auto loan defaults rise in October but remain at ‘low levels’

Auto loan defaults spiked a bit in October, though analysts say consumer credit default rates still remain at “low levels.”

According to data released Tuesday by S&P Dow Jones Indices and Experian, auto loan default rates came in at 1 percent in October, up 8 basis points on the S&P/Experian Consumer Credit Default Indices. In October 2014, the auto loan default rate was at 1.05 percent and in September of this year, rates came in at 0.92 percent.

The Indices, after being adjusted for October, show an overall default composite rate of 0.94 percent in October, which is up 5 points from September. The first mortgage default rate was up 1 percent and eight basis points last month.

In fact, the bank card default rate was the only rate to decline in October, coming in at 2.75 percent from the month, which is down two basis points.

“Despite recent modest increases, consumer credit default rates remain at low levels,” said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

“Defaults for bank cards had popped up somewhat in April, but subsequently fell back to the pace seen at the start of this year. At the same time, total bank card, or revolving, credit outstanding as reported by the Federal Reserve has been growing more rapidly in the past few years,” he continued. “The year-over-year growth increased from about 1 percent in 2012 to almost 5 percent in the third quarter of 2015. Non-revolving credit is also expanding at a stable 7.5 percent year-over-year pace in the last three years.”

Blitzer went on to say the indicators of the consumer economy are “mixed.”

“Total vehicle sales were strong with an 18 million unit annual rate in October, while retail sales showed scant growth at 0.1 percent per month in October. One positive item is that the University of Michigan consumer sentiment report came in at 93.1 in November compared to 90.0 in October,” he shared.

Breaking down the default rates by cities, Experian reported three of the five major cities saw their default rates rise last month.

• Miami saw a 1.29 percent default rate, up 22 basis points from September.
• New York’s default rate increased by five basis points to 0.95 percent for the month.
• Dallas reported a 0.75 percent default rate in October, up four basis points.

On the other hand, Chicago and Los Angeles both saw their defaults rate fall by two basis points each, coming in at 1.07 percent and 0.72 percent, respectively.