Default Rates Head Down Again

After four straight months of increases The S&P/ExperianrnConsumer Credit Default Indices fell in January as did the four loans typesrnthat make up the composite.  The DefaultrnIndex dropped from 2.24 percent in December to 2.16 percent in January.  In January 2011 the index was at 2.90rnpercent.  </p

Much of the decrease among the component indices was fromrnthe first mortgage component which dropped from 2.19 percent in December torn2.08 percent in January and was down significantly from the 2.86 percent levelrnof one year earlier.  The default raternfor second mortgages decreased from 1.33 percent to 1.30 percent and bank cardsrnfrom 4.60 percent to 4.57 percent; those rates were 1.51 percent and 6.13rnpercent respectively in January, 2011. rnAuto loans were unchanged at 1.27 percent but down from 1.58 percent onernyear earlier.</p

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

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

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