Default Rates Head Down Again

After four straight months of increases The S&P/Experian
Consumer Credit Default Indices
fell in January as did the four loans types
that make up the composite.  The Default
Index dropped from 2.24 percent in December to 2.16 percent in January.  In January 2011 the index was at 2.90

Much of the decrease among the component indices was from
the first mortgage component which dropped from 2.19 percent in December to
2.08 percent in January and was down significantly from the 2.86 percent level
of one year earlier.  The default rate
for second mortgages decreased from 1.33 percent to 1.30 percent and bank cards
from 4.60 percent to 4.57 percent; those rates were 1.51 percent and 6.13
percent respectively in January, 2011. 
Auto loans were unchanged at 1.27 percent but down from 1.58 percent one
year earlier.

David M. Blitzer, Managing Director and Chairman of the
Index Committee for S&P indicates said “As we begin the New Year, consumer default
rates may be resuming the two-year downward trend that was interrupted in the
middle of last year.  Last month we
reported that the second half of 2011 saw a modest increase in consumer
defaults led by four consecutive monthly increases in first mortgage defaults.  While one month of data is not a new trend,
January’s report shows broad based declines in default rates, which is a bit of
a relief.”

The Default Indices cover five cities, three of which had
lower rates in January.  Los Angeles fell
from 2.54 percent to 2.36 percent, Chicago dropped from 2.84 percent to 2.76
percent, and Dallas from 1.56 percent from 1.53 percent.  The rate in Miami rose for the third
consecutive month and is now at 4.80 compared to 4.73 percent in December and
New York increased ten basis points to 2.23 percent.

…(read more)

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