S&P/Experian Credit Default Indices Show Mainly Decreases in Default Rates

Over the past twelve months, the indices that follow consumer default rates have shown improvements, according to Experian and S&P.

Data released today by Standard & Poor’s and Experian for the indices of consumer credit defaults shows that, in May, the year-over-year defaults of consumer credits have decreased to 2.09 percent for first mortgages and to 1.42 percent for second mortgages, from the levels in April, of 2.16 percent and 1.51 percent.

The default rate for auto loans has also dropped to 1.34 percent in May, from 1.45 percent in April. In the credit cards sector, the default rates have increased slightly from 5.91 percent in April to 5.93 percent in May.

Chairman and Managing Director of the S&P Indices’ Index Committee, David Blitzer, said that month-to-month statistics presented some volatility. However, he added, the evolutions of default rates for several categories of consumer loans indicate that consumers are straightening out their balance sheets over the past years. Compared to the same period of last year, said David Blitzer, the indices show lowered default rates, and the image is even more optimistic if the data from this year is compared to that of 2008 and 2009.

The largest decreases of default rates were noted in New York – from 2.11 percent to 1.94 percent, Los Angeles – from 2.57 percent to 2.39 percent. Miami and Chicago posted default rates for May of 5.31 percent and 2.37 percent, respectively. In Dallas, there was a slight increase from 1.56 percent to 1.59 percent.

The data was provided by Experian, which has access to a database covering 11 trillion dollars worth of outstanding loans, collected from 11,500 financial lending institutions in the US.