Default Rates Approach Eight-Year Lows

Posted on Jul 17, 2012

"There is only positive news in June's Consumer Credit Default Indices," stated a S&P Dow Jones Indices spokesperson today.  Eight of the ten measures of the index dropped during the month and many are at historic lows.

The Composite Index and four of its five components were lowered during the month.  The Composite was down 10 basis points from May to 1.52 percent.  It had been at 2.14 percent in June 2011.  The First Mortgage Index fell to 1.41 percent from 1.50 in May and 2.02 in June 2011 and is now back to its May 2007 level after peaking at 5.67 percent in May 2009. 

The Second Mortgage rate was 0.73 percent versus 0.88 and 1.40 percent in the two previous time periods. The June figure is the lowest point ever for this component in the Indices' eight year history.  

The index measuring bank card defaults was at 3.97 percent, 38 basis points below the May number of 4.35.  It was 5.69 percent a year earlier.  Only the auto loan component rose and then only one basis point to 1.04 percent from 1.03 percent, its historic low. The Auto Index was 1.29 percent a year prior.

David M. Blitzer, Managing Director and Chairman of the Index Committee for the company stated that "June 2012 data continued a positive trend in consumer credit quality.  Consumer default rates are falling and we are approaching new lows across most loan categories."

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