Data released this week by S&P Indices and Experian showed the only decrease in credit line default rates in September occurred in auto loans, which dipped to 1.29% from August's 1.31%.
First and second mortgage default rates increased slightly, according to the S&P/Experian Consumer Credit Default Indices. First mortgages rose from 1.92% in August to 1.99% in September, and second mortgages from 1.27% to 1.32%. Bank card default rate showed the largest basis point increase, from 5.26% in August to 5.36% in September.
"While this is only one month of data, we have not seen so many increases in default rates in about a year or more," says David M. Blitzer, managing director and chairman of the Index Committee for S&P Indices. "For most of the past three years, consumer credit default rates have been declining across both loan types and regions. September's report was the first time we saw increases in four of five regions, three of four loan types and the composite, which rose from 2.04% to 2.10%. Bank cards rose to 5.36% in September from 5.26% in August, which is a bit of a concern. First and second mortgage default rates also rose during the month.
"This is the first time we have seen the rates go up for first mortgages since November 2010. Looking at the regions, New York saw the largest increase, moving from 1.80% to 2.01%. Given the fragile state of both the economy and consumer confidence can, we will have to closely monitor these data over the next few months to determine if September was just a temporary blip or the reversal of the recent trend."
Among the five major Metropolitan Statistical Areas (MSAs) reported in this release, New York showed its highest default rates since April 2011, increasing from 1.80% in August to 2.01% in September.
Chicago, Los Angeles and Miami increased moderately to 2.47%, 2.12% and 4.59% in September, from 2.43%, 2.07% and 4.52% in August, respectively. Dallas was the only MSA where default rates fell, from 1.51% in August to 1.33% in September.
