Data through May 2014, released by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed decline in national default rates from the previous month. The national composite posted 1.04 percent in May, the lowest default rate since May 2006. Both auto and bank card saw their default rates increase while mortgage default rates decreased. After setting new historic lows in March and April, the auto loan rate increased marginally by one basis point to 0.93 percent. The bank card rate was 2.97 percent in May, up 13 basis points over the prior month. The first mortgage default rate continued its downward trend from 1.30 percent in October 2013 to 0.92 percent in May 2014.
“Consumer credit default rates decreased for their seventh consecutive month,” said David M. Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices. “The national composite is now only one basis point above its historic low. Mortgage default rates saw the biggest decline when compared to auto and bank card rates. Although historically low default rates are welcome, some home buyers may have difficulty qualifying for mortgages. Last year saw a surge in home prices but we are seeing signs of slowing gains this year. One question is whether banks are willing to make mortgage loans as home prices rise faster than incomes.”
“New York was the only city to see its default rate increase but it showed the largest drop-off from one year ago. Dallas posted a new historic low of 0.77 percent while Chicago, Los Angeles and Miami are at their lowest default rates since the start of the last recession. Miami continues to maintain the highest default rate of 1.74 percent while Dallas maintains the lowest rate of 0.77 percent. All five cities – Chicago, Dallas, Los Angeles, Miami and New York – remain below default rates seen a year ago.”
The table to the left summarizes the May 2014 results for the S&P/Experian Credit Default Indices