Default Rates Remain Stable In First Month Of New Year

S&P Dow Jones Indices and Experian Wednesday (Feb. 20) released the S&P/Experian Consumer Credit Default Indices data, representing a comprehensive measure of changes in consumer credit defaults. For January the Indices showed that the composite rate rose 1 basis point from last month to 0.90 percent.

In a press release, the companies said the bank card default rate rose 8 basis points to 3.4 percent while the auto loan default rate fell 4 basis points to 0.99 percent. The first mortgage default rate was 2 basis points higher at 0.69 percent.

S&P Dow Jones Indices and Experian said that three of the major Metropolitan Statistical Areas (MSAs) showed higher default rates when compared to the month prior. The rate for Miami increased 26 basis points to 2.19 percent while the rate for Dallas rose 4 basis points to 0.89 percent. The companies said the default rate for New York was up 3 basis points to 0.99 percent while the rate for Chicago was unchanged at 0.88 percent and the rate for Los Angeles decreased 3 basis points to 0.49 percent.

“The uptick in the bank card default rate combined with a decline in the auto default rate reflects volatility in the consumer economy,” David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said in the press release. “Coming off some swings in market sentiment and recovering from the government shut down, there was a sharp drop in December retail sales and a pullback in January automobiles sales. Consumer sentiment has also bounced around but has recovered in the latest reports. Consumers and investors are both trying to discern which trends will shape the 2019 economy.”

The companies went on to note that following a month where the default rates for every loan type rose, the January 2019 data reveals default rates that are largely unchanged from the month earlier. What’s more, the longer term trends shows default rates have stabilized.