An Increase in the S&P/Experian Consumer Credit Default Indices

Data through June 2015, released today by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed increases in first mortgage, second mortgage, and composite default rates. The composite rate posted a 0.93% default rate in June, five basis points up from the previous month. The first mortgage default rate reported a default rate of 0.80%, six basis points up from its historical low in May. The auto loan default rate reported a new historical low of 0.85%, a one basis point decrease from the previous month. The bank card default rate dropped another 10 basis points, reporting 2.88% in June. The second mortgage default rate reported an increase of 13 basis points to 0.55%.

Three of the five major cities also continued their downward trend, reporting negative month-over-month default rates in June. Los Angeles led the way, reporting 0.88%, down seven basis points from the previous month. New York and Dallas continued their downward inclination, reporting historical lows of 0.91% and 0.68%, decreases of four basis points and two basis points, respectively. Miami had a significant increase of 25 basis points, reporting 1.42% in June. Chicago bounced back from a three month decline to report a default rate of 1.04%, up four basis points from the previous month.

“This report, and the economy’s overall condition, both look a lot like last month,” said David M. Blitzer, Managing Director and Chairman of the Index Committee. “The economy continues to expand at a modest pace, helped by the 5.3% unemployment rate, a continued low rate of initial unemployment claims, and recent improvements in housing starts. All of these factors should continue to support the current low rate of consumer credit defaults. However, some factors raise concern for both consumers’ financial conditions and the economy. While oil prices are low, they remain volatile as traders and investors weigh the impact of Greece, the agreement with Iran, and the latest bounce and bump in China’s equity market. For consumer spending, oil matters the most of these possible developments. Oil price swings are feeding into consumer prices as seen in the uptick in the June CPI numbers. However, we would need higher inflation for a long time period before it would worry consumers or cause a pause in spending or credit usage.

“Looking across the five cities reported on each month, Miami shows a jump in consumer defaults, Chicago saw a slight uptick, while the others saw default rates flat to down. The favorable default trends remain in place. The increase in Chicago’s numbers is too small to be a concern. Miami’s figure does not appear to be an issue, either; in the next month or two, data are likely to show Miami in good shape compared with the other cities. Among the different categories, bank cards saw the largest drop while auto loans were off by a tick. First and second mortgages saw a small increase in defaults. None of these data are immediate cause for concern. They reflect continued optimism and spending by consumers.”

The table below summarizes the June 2015 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

The table below provides the S&P/Experian Consumer Default Composite Indices for the five MSAs:

About S&P Dow Jones Indices
S&P Dow Jones Indices LLC, a part of McGraw Hill Financial, is the world’s largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average™, S&P Dow Jones Indices LLC has over 115 years of experience constructing innovative and transparent solutions that fulfill the needs of investors. More assets are invested in products based upon our indices than any other provider in the world. With over 1,000,000 indices covering a wide range of asset classes across the globe, S&P Dow Jones Indices LLC defines the way investors measure and trade the markets. To learn more about our company, please visit www.spdji.com.

Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC, a part of McGraw Hill Financial. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).  These trademarks have been licensed to S&P Dow Jones Indices LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (collectively “S&P Dow Jones Indices”) do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices does not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.

About Experian
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. In 2014, we were named by Forbes magazine as one of the “World’s Most Innovative Companies.”

We employ approximately 16,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and Sao Paulo, Brazil.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2014, was US$4.8 billion.

To find out more about our company, please visit http://www.experianplc.com or watch our documentary, “Inside Experian.”

The post An Increase in the S&P/Experian Consumer Credit Default Indices appeared first on Live Trading News.