Consumers continue to repair their balance sheets

S&P/Experian Consumer Credit Default Indices. Sources: S&P Dow Jones Indices and Experian

On July 17th, S&P Dow Jones Indices and Experian released June 2012 data for the S&P/Experian Consumer Credit Default Indices, which measure consumer credit default rates. June data showed a decline in the composite index, led by an nine basis point drop in first mortgage default rates. Second mortgage default rates fell by even more over the month, 15 basis points, but hold a smaller weight in the composite. The national composite declined to 1.52% in June from May’s 1.62% rate, the first mortgage default rate decreased from May’s 1.50% to June’s 1.41% and the second mortgage rates declined from 0.88% in May to 0.73% in June.

With June’s data first and second mortgage, bank card and composite default rates all reached post-recession lows. Auto loan rates rose marginally but posted their recent low last month with May’s data. Four of the five cities we cover saw their default rates drop, and all four are at post-recession lows. New York was the only city to see default rates rise, and that was only by 3 basis points.

As seen in the graph above, consumer default rates are below their pre-crisis rates, with the first mortgage and composite rates around those last witnessed in late 2006, and the second mortgage rates are at their eight-year historic low. Consumer credit quality is improving.

The posts on this blog are opinions, not advice.
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