S&P Dow Jones Indices and Experian released data through December of 2018 on Tuesday (Jan. 15) that showed default rates across all loan types increased from November.
According to the S&P Dow Jones Indices and Experian, December of 2018 marked the first time since January of 2017 that all loan types and all metropolitan statistical areas saw an increase in sequential default rates.
“Consumer credit default rates are giving a caution signal,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, in a press releasing announcing the data. “It has been almost two years since default rates across the three sectors and all five cities tracked in this report rose together.”
Blitzer noted that the economic picture behind autos, mortgages and bank cards are all showing different patterns. For instance, housing is being hurt by rising prices and higher mortgage rates, resulting in a decline in sales of new and existing homes. Meanwhile, in the auto industry, Blitzer said sales were steady in 2017 and 2018, hovering around 17 million on an annual basis. As for retail sales and consumer spending, that saw increased growth last year, and there are little signs that credit tightening is impacting consumer sentiment and spending levels, he said.
According to the S&P/Experian Consumer Credit Default Indices, which the companies said in a press release represent a comprehensive measure of changes in consumer credit defaults, the composite rate rose six basis points from December to 0.89 percent. The bank card default rate rose 25 basis points to 3.34 percent, while the auto loan default rate jumped 10 basis points to 1.03 percent. The default rate on first mortgages was three basis points higher at 0.67 percent.
What’s more, S&P Dow Jones Indices and Experian said that all five of the metropolitan statistical areas showed a higher default rate in December of 2018. In Miami, it increased 41 basis points to 1.93 percent, while New York saw a 13 basis-point increase to 0.96 percent and the Chicago default rate was up four basis points to 0.88 percent. In Dallas, the default rate ticked up three basis points to 0.85 percent, while in Los Angeles it was up two basis points to 0.52 percent.