Smart Borrower Blog

Auto Default Rates Hold Steady in June


Jul 18th, 2018 @ 9:10 PM by Amber Nelson


American car loan borrowers stayed on top of their payments in June at the same rate they did in May, according to data from the S&P Dow Jones Indices and Experian, the first time in six months that the default rate hasn’t changed on a monthly basis.

Auto loan defaults made up 0.93% of all car loans as of June, unchanged from the month before. The last time the default rate was the same for two consecutive months was last October and November, when it was 1.11%.

Other types of consumer default rates dropped in June though, leading the comprehensive S&P/Experian composite rate to fall 3 basis points to 0.86%. That decline included a 13 basis point drop in bank card defaults to 3.71% of all loans. It also included a decrease in first mortgage defaults, with the rate falling 3 basis points to 0.63% in June.

“The favorable economic conditions consumers enjoyed in the last few years are confirmed by more than the current low levels of consumer credit default rates,” said David Blitzer, managing director and chairman of the S&P Down Jones Indices committee. “Unemployment was falling to 4 percent or lower, inflation barely crept up after touching zero in 2015, and real (inflation adjusted) earnings rose as wages outpaced inflation. The ratio of household debt service to disposable income stayed close to the lowest levels in three decades.”

Blitzer did note, however, that while default rates for all credit categories fell or were unchanged in June, all rates were still higher than they were a year ago.

The S&P/Experian indices are based on the data collected from Experian’s consumer credit data base as well as information from 11,500 leading banks and mortgage companies, accounting for $11 trillion in outstanding loans.

About Amber Nelson
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.

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