Auto Loan Performance Again Helps S&P/Experian Credit Default Indices Improve
NEW YORK — Although not to the degree of other consumer credit segments, an improving auto loan performance helped the February S&P/Experian Consumer Credit Default Indices make more positive month-over-month and year-over-year progress.
Standard & Poor's and Experian analysts determined that vehicle contract defaults settled at 1.58 percent, only a 0.05 percent downtick from the first month of 2011 but a strong 36.96 percent decline from February of last year.
Overall, the comprehensive measure of changes in consumer credit defaults came in with a February composite reading of 2.54 percent, a 12.5-percent improvement from January and a 42.28-percent enhancement from a year ago.
Providing the greatest amount of fuel to that overall decline was the drop associated with first mortgages. S&P and Experian found this credit category posted an index level at 2.45 percent, down 14.04 percent month-over-month and 43.27 percent year-over-year.
Second mortgages improved, too, coming in with a February mark of 1.46 percent. The reading was 3.41 percent lower than a month ago and 52.10 percent lower than February 2010. Analysts discovered the year-over-year improvement by second mortgages was the greatest of any of the five consumer credit categories they track for the indices.
Meanwhile that fifth segment — bank cards — had the greatest month-over-month drop. S&P and Experian discovered February bank card defaults were at 5.67 percent, a 7.5-percent improvement from January and a 32.92-percent improvement from a year ago.
Moving over to a look at the February S&P/Experian Consumer Credit Default Indices by metro area, one city sustained a month-over-month increase. Analysts determined Chicago's reading was 2.83 percent, a 2.86-percent uptick from January. Still, Chicago's mark was 38.05 percent lower than a year ago.
The lowest overall reading again went to Dallas, which came in a 1.78 percent. That figure left the city with a 13.96 percent month-over-month improvement and a 43.17 percent year-over-year improvement.
The remaining three cities included in the report were:
—New York: February index reading of 2.53 percent, down 4.43 percent from January and 38.35 percent from a year ago.
—Los Angeles: February index reading of 2.7 percent, down 2.05 percent from January and 55.15 percent from a year ago.
—Miami: February index reading on 6.05 percent, down 6.32 percent from January and 51.08 percent from a year ago.
"Default rates continue to fall across all major categories and year over year across the five high-lighted cities. The overall trend has lasted a number of months now, reflecting improved consumer health and the appearance of continued economic recovery," explained Craig Feldman, director at S&P Indices.
Standard & Poor's and Experian reiterated that the indices are constructed to accurately track the default experience of consumer balances in four key loan categories and are calculated based on data extracted from Experian's consumer credit database. Analysts said this database is populated with individual consumer loan and payment data submitted by lenders to Experian every month.
"Experian's base of data contributors includes leading banks and mortgage companies, and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders," analysts pointed out.