Consumer default rates rose slightly in August, reversing a downward trend, according to the latest S&P/Experian Consumer Credit Default Indices. The overall national composite jumped two basis points from July's historical low to 1.03% in August.
The first mortgage default increased to .91%, ending a nine-month run of declining numbers, but an increase - even a small one - was not surprising given the growth in home sales. The bank card rate fell 13 basis points to 2.73% while he auto loan default rate rose to 1% in August.
"With the recent and continued growth in the economy, sales of automobiles and existing homes have gained since the start of the year," says David M. Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices.
"These factors may be leading to more borrowing and modest increases in default rates. No return to the extreme default experience of a few years ago is imminent," he added.
Chicago and Dallas saw their default rates remain unchanged at 1.17% and 0.80%. New York posted 1.07%, its lowest default rate since July 2006. Miami's rate fell to its lowest mark since August 2006 but still posted the highest default rate of 1.45%. Los Angeles was the only city to see its rate increase but it continues to maintain the lowest default rate. All five major cities Chicago, Dallas, Los Angeles, Miami and New York remain below default rates seen a year ago.
