, auto finance defaults are remaining stable so far this year.
S&P Dow Jones Indices and Experian released data through February for the S&P/Experian Consumer Credit Default Indices, and the auto component remained unchanged at 0.99 percent.
In fact, the latest reading is actually 10 basis points lower based on a year-over-year comparison. The rate also has been below 1 percent for 10 of the past 11 months.
Meanwhile, analysts discovered the February composite rate that represents a comprehensive measure of changes in consumer credit defaults ticked up 2 basis points on a sequential basis to 0.92 percent. The reading stayed 4 basis points lower than the year-ago level.
S&P and Experian went on to note the bank card default rate rose 6 basis points to 3.48 percent, while the first mortgage default rate ticked up 1 basis point to 0.70 percent.
After seven straight months of decline, the latest update indicated bank card default rates now have increased for three consecutive months. This upward trend has been the primary contributing factor to the concurrent increase in the composite default rate, which has seen its rate increase for five straight months.
All default rates are lower compared to 12 months ago, according to S&P and Experian.
Turning to their data based on geography, analysts noticed four of the major market they watched monthly showed higher default rates in February compared to the previous month.
The rate for New York increased 6 basis points to 1.05 percent, while the rate for Chicago rose 4 basis points to 0.92 percent.
The default rate for Los Angeles was up 2 basis points to 0.51 percent, while the rate for Dallas inched 1 basis point higher to 0.90 percent.
The rate for Miami bucked the February trend, decreasing 12 basis points to 2.07 percent.
David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, reviewed the latest data and broader trends and offered this assessment.
“This month’s data show that four of the five cities tracked as well as all consumer credit default categories were higher in February,” Blitzer said. “This is more of a seasonal shift than a sign of rising default rates. Over the last several years, December, January and February have all experienced increases in default rates across cities and loan categories. Further, none of the figures suffered large increases compared to their levels of one year ago.
“Retail sales saw strong gains in January and auto sales continued at an annual rate of about 16.5 million vehicles. Any upward pressure on mortgage defaults stemming from the rise in home prices over the last few years is being offset by weakened sales of new and existing homes,” he continued.
“The overall economy is not expected to put any pressure on consumers’ financial condition,” Blitzer went on to say. “Employment and job growth continue to be quite strong and wages have recently seen some gains. The economy is settling into a stable growth path with anticipated GDP gains of 2 percent to 2.5 percent by most analysts in 2019.
“Two perennial sources of anxiety for economists and consumers are inflation and the unemployment rate,” he added. “Inflation remains around 2 percent and the unemployment rate is at or below 4 percent in recent data. As long as these figures remain steady, the Fed isn’t likely to shift interest rates and consumers should not have difficulty paying their bills, which could keep default rates close to current levels.”
Jointly developed by S&P Indices and Experian, analysts noted the S&P/Experian Consumer Credit Default Indices are published monthly with the intent to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien.
The indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month.
Experian’s base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.