S&P/Experian Say Defaults Declining
NEW YORK — In some good news for the industry, in analyzing trends for their default indices Standard & Poor's and Experian discovered that monthly default rates declined for all five credit lines.
Auto loan defaults came in at 1.7 percent in June, down slightly from 1.8 percent in May. Defaulting balances on bank card loans came in at 8.8 percent, down from 8.9 percent in May. First and second mortgage default rates were 3.3 percent and 2.4 percent, respectively, with first mortgage default rates declining 5 percent from the prior month and 45.2 percent from a year ago.
"The consumer credit picture shows encouraging progress as default rates continue to fall across major categories and in the highlighted cities. The data are consistent with reports that people continue to eschew debt and as the slow recovery from recession and financial turmoil continues," explained David Blitzer, manager director and chairman of the Index Committee at Standard & Poor's.
"For the economy, this is mixed news, better credit quality, as seen in this report is clearly positive. However, as reported earlier by the Federal Reserve, consumers' credit use is declining, dampening the outlook for spending," he continued.
Consumer credit defaults vary across major cities and regions of the U.S. Looking at five major metropolitan statistical areas, New York showed the largest decline in defaults in the last month at 12.11 percent, while Dallas showed the smallest decrease of 29.59 percent in the past year. The sharpest decline was in Miami, where defaults declined 53.55 percent in the last 12 months.
In a breakdown, the companies revealed:
New York
June Index Level: 3.46 percent
Change from May 2010: down 12.11 percent
Change from June 2009: down 32.97 percent
Chicago
June Index Level: 3.63 percent
Change from May 2010: down 6.98 percent
Change from June 2009: down 33.60 percent
Dallas
Los Angeles
June Index Level: 4.74 percent
Change from May 2010: down 4.31 percent
Change from June 2009: down 40.02 percent
Miami
June Index Level: 8.53 percent
Change from May 2010: down 8.12 percent
Change from June 2009: down 53.55 percent
Looking specifically at auto loan trends, the companies reported:
Auto Loans
June Index Level: 1.69 percent
Change from May 2010: down 3.61 percent
Change from June 2009: down 22.34 percent