Data through January 2012, released by Standard & Poor's (S&P) Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a measure of changes in consumer credit defaults, has shown that most loan types saw a decrease in default rates during January. After four consecutive months of increasing default rates, the national composite declined to 2.16 percent in January 2012 from the 2.24 percent December rate, mostly driven by a decrease in the first mortgage default rates from 2.19 percent in December to 2.08 percent in January.
Second mortgage and bank card default rates also moved down from 1.33 percent and 4.60 percent in December to 1.30 percent and 4.57 percent in January, respectively. Auto loans default rates remained unchanged at 1.27 percent.
“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,” said David M. Blitzer, managing director and chairman of the Index Committee for S&P Indices. “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 default. 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 table below summarizes the January 2012 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.
“First mortgage default rates fell by 11 basis points in January, completely reversing the increase seen in November and December," said Blitzer. "First mortgage loans and, consequently, their default rates are the largest among consumer loan types, so these default rates drive the composite. Second mortgage and bank card default rates also fell in January, but not by as much. The good news is that if you look across all loan types, their default rates are all pretty close to the three-year lows they reached in 2011, and all of them are at least cut in half from their relative maximum rates, most of which occurred in 2009."
The table below provides the S&P/Experian Consumer Default Composite Indices for the five MSAs:
“Looking at the five cities we cover, three of them had lower default rates. Los Angeles had the largest decline, moving from 2.54 percent in December to 2.36 percent in January," said Blitzer. "Chicago fell from 2.84 percent to 2.76 percent. And Dallas, which retains the lowest rate among the five cities we follow, fell to 1.53 percent from 1.56 percent. Miami default rates have risen for three consecutive months, and has the highest default rate of 4.80 percent.”