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After Falling to Record Low, Default Rates Rise Again

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After Falling to Record Low, Default Rates Rise Again
January
16

Consumer credit default rates are on the rise again, according to the S&P/Experian Consumer Credit Default Indices released yesterday.

The survey, which looks at data from five cities – Miami, Chicago, Los Angeles, New York City, and Dallas – showed increases in default rates ranging from one point (Dallas) to 41 points (Miami). However, rates in all five cities were still below their December 2011 levels.

September 2012 had the lowest default rates since the recession, with a national composite rate of 1.46%. Since then, that number has risen steadily – to 1.55% in October, 1.64% in November, and most recently, 1.72% last month.

Mortgage default rates followed the trend – after a post-recession record low in September, the number of defaults rose each month through December. Second mortgage default rates were up as well. Other element of the indices includes auto loan defaults, which were flat, and bank card defaults, which were actually down. They hit a low of 3.53% in December. Bank card defaults were 3.58% in November.

“Fourth quarter default rates reversed some of the recent declines and pushed the composite default rate above its level of last May,” according to the chairman of the S&P Dow Jones Indices Index Committee, David Blitzer. Mortgages – both first and second – were the main culprit, he said.

S&P/Experian Consumer Credit Default Indices
Index December 2012
Index Level
November 2012
Index Level
December 2011
Index Level
Composite 1.72 1.64 2.24
First Mortgage 1.68 1.58 2.19
Second Mortgage 0.69 0.62 1.33
Bank Card 3.53 3.58 4.60
Auto Loans 1.09 1.09 1.27

The S&P/Experian Consumer Default Composite Indices for the five metropolitan service areas for the last quarter of the year:

The S&P/Experian Consumer Default Composite Indices
Metropolitan
Statistical Area
December 2012
Index Level
November 2012
Index Level
December 2011
Index Level
New York 1.51 1.47 2.13
Chicago 2.12 1.85 2.84
Dallas 1.26 1.25 1.56
Los Angeles 1.84 1.60 2.54
Miami 3.07 2.66 4.73

Source: S&P/Experian Consumer Credit Default Indices
Data through December 2012

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