March auto defaults drop to lowest reading in 10 years


Perhaps still reflecting seasonality, S&P Dow Jones Indices and Experian noticed the auto-finance default rate improved in March.

In fact, the rate not only improved, but it also dropped to the lowest reading going back 10 years.

With other data sets are showing soaring unemployment and plunging used-vehicle values, the auto component of the March S&P/Experian Consumer Credit Default Indices came in at 0.81%, dropping 8 basis points compared to the previous month.

And according to analyst data available going back to February 2010, the latest auto default reading edged out the previous low, which was set in June 2017 at 0.82%

Meanwhile, the March composite rate — a comprehensive measure of changes in consumer credit defaults declined 3 basis points on a sequential basis to land at 0.99%.

Analysts found the bank card default rate rose 53 basis points to 3.94%, while the first mortgage default rate fell 7 basis points to 0.77%.

Looking at the latest data by location, S&P and Experian determined four of the five largest U.S. metropolitan areas posted lower default rates in March compared to the previous month.

Miami enjoyed the largest decrease, dropping 23 basis points to 1.43%. Los Angeles decline 9 basis points to land at 0.71%.

Analysts noticed New York and Dallas each ticked 1 basis point lower to settle at 0.99% and 1.01% respectively.

Chicago was the only city of the five that did not decrease as its March default rate of 1.21% remained unchanged from the previous month.

Jointly developed by S&P Indices and Experian, analysts noted the S&P/Experian Consumer Credit Default Indices are published monthly with the intent to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien.

The indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month.

Experian’s base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.

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