Data on consumer borrowing and debt released by S&P Dow Jones Indices and Experian show consumer credit default rates stabilized in December.
The S&P/Experian Consumer Credit Default Indices, a measure of changes in consumer credit defaults, indicates the December composite rate remained at 0.97%, the same result from November, according to a news release from S&P and Experian.
The bank card default rate fell 42 basis points in December, recording a default rate of 2.49%, according to the news release. The auto loan default rate, 1.04%, also remained the same as a year earlier. The first mortgage default rate increased two basis points to 0.84% in December, according to the news release.
"The consumer economy looks good," David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices in the news release. "Consumer credit default rates are low and stable, and consumer sentiment measures are upbeat."
Personal consumption expenditures increased 2% in 2015 (December to December) and spending on durable goods increased 4.8% during the same period, according to Blitzer. He said 2016 started with a drop in stock prices on Wall Street as a result of the strong dollar and weak oil process.
"For consumers, both of these are good stories – cheap gas and lower prices on imports," according to Blitzer. "Other parts of the economy also favor consumer spending: the unemployment rate is down to 5% and the weekly initial unemployment claims reports signal further economic growth. Inflation remains low, lower than the Federal Reserve would like. Consumers aren’t showing any signs of anxiety driven by the stock market."
Regarding home ownership, December’s report showed the first mortgage default rate increased two basis points (bps) from November to post at 0.84%, while the second mortgage default rate remained unchanged at 0.67%. The auto loan default rate also was unchanged at 1.04%, while the bank card default rate decreased 42 basis points in December, recording a default rate of 2.49%. The composite rate for consumer credit defaults for December was 0.97%, unchanged from the previous month.