July’s Auto Loan Delinquency Trends Creep Lower
NEW YORK — July auto loan defaults followed the same pattern established by other categories of consumer credit, pushing downward on both a month-over-month and year-over year basis.
The S&P/Experian Consumer Credit Default Indices based on July data showed the auto loan reading ticked down to 1.27 percent. In June, it was 1.29 percent, and a year ago, the reading stood at 1.96 percent.
Elsewhere, there were declines in the composite index, as well as the individual readings for first mortgages, second mortgages and bank cards.
S&P and Experian discovered second-mortgage defaults improved the most month-over-month of any credit category. The second mortgage default index stood at 1.25 percent in July, down from 1.40 percent in June and 2.77 percent last July.
The strongest year-over-year drop was connected with bank cards. Last July, the bank car index settled at 8.20 percent, but a year later it sunk to 5.64 percent. In June, the reading was 5.69 percent.
First mortgage defaults also improved as the July index came in at 1.93 percent, down from the June mark of 2.02 percent and the year-ago reading of 3.24 percent.
All told, the S&P/Experian July composite index settled at 2.06 percent, edging lower from June's reading of 2.14 percent and last July's index of 3.42 percent.
"By and large, July's data support the downward trend we have observed over the past two years," explained David Blitzer, managing director and chairman of the index committee for S&P Indices.
"Despite high unemployment rates, consumers continue to improve their financial positions, resulting in lower default rates than we were seeing during the recession," Blitzer continued.
"All indices show default rates well below where they were in 2008 and 2009. However, occasional increases in some of the regional composites suggest that default rates may not fall a lot farther," he went on to say.
As Blitzer alluded to, consumer credit defaults varied across major cities in the U.S.
Among the five major metropolitan statistical areas monitored monthly, S&P and Experian determined Dallas experienced a small increase in default rates from 1.59 percent in June to 1.60 percent in July. However, Dallas' rate a year ago was 2.45 percent.
Blitzer pointed out Los Angeles and Miami decreased moderately in July to 2.15 percent and 5.37 percent. A month earlier, Los Angeles stood at 2.17, while Miami was 5.41 percent.
Similarly, New York and Chicago saw default rates decrease. In New York, the month-over-month change was 1.82 percent to 1.80 percent. In Chicago, the rate dipped from 2.59 percent to 2.54 percent.
"While recording the highest default rate of the five cities we report, Miami is still far off the near-19 percent it had reported two years ago," Blitzer emphasized.
"However, the sluggish economies in both Miami and Chicago appear to be having a more severe impact on their residents than some of the other markets," he continued. "Recent housing data has also pointed to weakness in these two markets beyond the national averages."