By Ian McKendry

WASHINGTON (MNI) – The default rates on first and second mortgages,
credit cards, and auto loans appear to be stabilizing as the economy and
consumers’ financial situations are starting to improve, a Tuesday
report from S&P Indices and Experian found.

“Four of the five loan types posted their lowest rates since the
end of the 2007/2009 recession, only second mortgages increased
marginally from 0.73% in June to 0.75% in July” the report said.

The report, which publishes a composite default rate index along
with an index for first and second mortgages, bank cards and auto loans
showed that default rates for auto loans and bank cards fell slightly
while first mortgage default rates remained flat.

“While continuing to show decreasing default rates, most of the
changes in July were small compared to the magnitude of decline we had
seen in the first six months of the year,” David Blitzer, the managing
director and chairman of the index committee for S&P Dow Jones Indices
said in a statement Tuesday.

“Consumer default rates showed small movement from June to July, in
most cases the trend continued down or flat, as the consumer’s financial
condition continues to improve,” Blitzer added.

Bank card default rates had the largest decline, falling from 3.97%
in June to 3.83% in July which is the lowest since August 2007, while
auto loan default rates fell from 1.04% to 1.01%. First loan default
rates were constant at 1.41%.

“Auto loans rates hit an eight year historic low in July,” Blitzer
said, adding “looking at the rate of new defaults in mortgages or auto
loans, the consumers’ credit position has recovered from the financial
crisis.”

S&P/Experian Consumer Credit Default Indices National Indices

Index Jul’12 Jun’12 Jul’11
———————————————————————-
Composite 1.51 1.52 2.06
First Mortgage 1.41 1.41 1.93
Second Mortgage 0.75 0.73 1.25
Bank Card 3.83 3.97 5.64
Auto Loans 1.01 1.04 1.27

Source: S&P/Experian Consumer Credit Default Indices

Data through July 2012

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MAUDS$]