Consumer Credit Default Rates Continue to Rise

The national composite index for consumer credit defaults increased in November for the third straight month from 2.15% to 2.22%, according to the latest report from S&P/Experian.

First mortgage defaults helped drive the national composite as this category rose to 2.17% from 2.08% in October. Similar to the national index, November marked the third consecutive month that first mortgage default rates experienced a month-over-month jump.

Since August, first mortgage default rates have risen from 1.92% to the current rate of 2.17%.

“The weight of first mortgage default rates tends to drive the trend in the national composite,” said David Blitzer, managing director and chairman of the index committee for S&P Indices.

Blitzer added that the national composite has risen over the last three months from 2.04% to 2.22% and said he is not “surprised” by these figures because of the recent weakness in other housing statistics.

Another indice the report monitors that experienced a monthly increase were bank card default rates, which went up to 4.91% from 4.85%. However, Blitzer said this moderate rise is still “well below” the default rates seen in late 2009 and early 2010.

Meanwhile, second mortgage credit defaults decreased slightly last month from 1.29% in October to 1.26% in November, while auto loans were also down from 1.22% to 1.17%.

All five major metropolitan statistical areas looked at in this report showed increases in their November credit default rates.

Los Angeles had the highest default rate rise among these MSAs from 2.15% in October to 2.53% in November. Miami, Chicago and New York increased to 4.47%, 2.84% and 2.21% in November, from 4.16%, 2.64% and 2.09% the prior month, respectively. Lastly, the default rate in Dallas moved up slightly from 1.3% in October to 1.38% in November.

The report said that Chicago, New York and Los Angeles have all seen their default rates increase month-over-month for the last three months.

“While there may be some cause for concern if this upward trend continues, other recent housing statistics point to the same relative weakness, so these statistics align with the overall current picture of the economy,” Blitzer said.