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Consumer credit default rates continue to decline

By Max Thompson
November 2nd, 2012

September default rates fall

Default rates across many consumer credit products continued the downward trend that has been seen in recent months, Experian said in a recent report.

According to S&P Dow Jones Indices and Experian, many consumer loan types saw default rates decline in September, which marked the ninth straight months of monthly declines.

The S&P/Experian Consumer Credit Default Indices revealed that four of five loan types saw the lowest default rates since near the end of the recent recession.

“We think it is very fair to say that 2012 has proven to be a period of financial repair for consumers,” David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices, said in a statement. “Consumers’ financial condition continues to improve as witnessed by these declining credit default rates.”

September default rate results:

The bank credit card default rate decreased from 3.77 percent in August to 3.70 percent in September.
The mortgage default rate (first mortgages) decreased from 1.40 percent in August to 1.36 percent in September.
The mortgage default rate (second mortgages) decreased from 0.72 percent in August to 0.64 percent in September.
The auto loan default rate increased from 1.09 percent in August to 1.11 percent in September.
The composite index fell from 1.50 percent in August to 1.46 percent in September (a post-recession low).

“Only the auto loan rate rose in September, up two basis points to 1.11%,” Blitzer said. “This is still a decent number, as the historic low for such loans was 1.01% posted just two months ago in July.”

Default rates for bank credit cards, both first and second mortgages, and also the composite default rate all hit new post-recession lows, Blitzer said. The default rate for first mortgages has seen declines in nine straight months, he added.

Posted in: Credit Cards, Home Equity, Loans, Mortgage

Credit Cards News: This article was published on 11-2-2012 at 9:53 am.

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