Consumer credit defaults dropped to a new post-recession low during April, S&P Dow Jones Indices and Experian reported.
The comprehensive measure of changes dropped seven basis points between March and April—reaching 0.86%. First mortgage defaults dropped eight basis points, to 0.69%. Auto loan defaults decreased five basis points, to 0.97%, while the bank card default rate increased 17 basis points in April, recording a default rate of 3.09%.
"For two months, the overall consumer credit default rate has dropped to new lows while the default rate on bank cards has climbed," David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, said. "Since the financial crisis, consumers are paying more attention to their debts, particularly longer term financial commitments such as homes and autos."
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The total debt service ratio is close to a record low, he said. The savings rate stands at 5% of disposable income, slightly higher than the level between 2004 and 2006.
Blitzer said that the bank card rate is more volatile than the others and is more sensitive to consumer spending trends.
"Whether the default pattern for bank cards stabilizes remains to be seen," he added.
Three of the five major cities had overall default rates increase during April, led by Miami, with a six basis point increase, followed by New York, up two basis points; and Dallas, with a one basis point increase. Los Angeles was the only city to report a default rate decrease, down 10 basis points from March.
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