Third Consecutive Monthly Increase in National Credit Default Rates in November

Data through November 2011, released today by S&P Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed that first mortgage and bank card default rates rose to 2.17% and 4.91% in November, from 2.08% and 4.85% in October, respectively. Second mortgage and auto loans default rates decreased slightly; second mortgages moved down from 1.29% in October to 1.26% in November, and auto loans from 1.22% to 1.17%. The increases in first mortgage and bank card rates, however, caused the national composite to rise from 2.15% to 2.22%.

“As we indicated last month, the weight of first mortgage default rates tends to drive the trend in the national composite,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “First mortgage default rates rose for the third consecutive month, leading the same pattern for the composite. Since August, first mortgage default rates have risen from 1.92% to the 2.17% November rate, or 0.25 percentage points. The composite has also risen in each of those three months, from 2.04% to 2.22%. These figures are not too surprising given some of the weak housing statistics we have seen over the past few months. We also saw an increase in bank card default rates in November; but the October decline was so large that the November 4.91% is still well below the default rates we saw in late 2009 and early 2010. Auto loans and second mortgages saw drops in their default rates in November.

“Looking at the regions, all five saw their rates increase. Los Angeles saw the largest increase, moving from 2.15% in October to 2.53% in November, which is a fairly significant 0.39 percentage points. Miami was not far behind, moving from 4.16% to 4.47%. These are two markets where we have seen some recent weakness in other housing statistics. Again, while there may be some cause for concern if this upward trend continues. Other recent housing statistics point to the same relative weakness, so these statistics align with the overall current picture of the economy.”