U.S. Consumer Credit Default Rates Increase in November; Mortgages Leading All Categories

Residential News » Residential Real Estate Edition | By Michael Gerrity | December 21, 2010 11:08 AM ET

According to Standard & Poor's and Experian for the S&P/Experian Consumer Credit Default Indices for November 2010, there was a rise in monthly default rates for first and second mortgages to 3.05% and 1.80% respectively. While this is the first rise in defaults for first mortgages since December 2009, year over year decline is still 34.84%. Auto loans experienced the biggest decline this month to 1.76% from 1.92% in October. The bank card index declined slightly to 6.84% default rate.

"Default rates for auto loans and bank cards declined in November while first and second mortgages experienced somewhat higher defaults. However, the deterioration in the mortgage sector may be temporary: rates of new defaults have been declining for over a year with occasional brief interruptions," says David M. Blitzer, Managing Director and Chairman of the Index Committee.

"Government economic data point to improvements in the bank card and auto sectors with increases in credit balances and rising sales. The figures for five leading metropolitan areas confirm key housing trends found in other S&P reports.  Los Angeles is experiencing the beginning of stability in housing while Miami, and much of Florida, continue to face credit default concerns. Other metropolitan areas are seeing gradual improvements in consumer credit defaults as their economies stabilize."

Consumer credit defaults varied across major cities and regions of the U.S. Among the five major Metropolitan Statistical Areas reported each month in this release only Dallas had declining default rates of 2.20%. Los Angeles and Chicago experienced slights increases in defaults this month to 3.25% and 3.34% respectively. Miami had the largest monthly increase to 10.26%, driven by the large increase in first mortgage defaults.

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