S&P/Experian Consumer Credit Default Indices show composite default rate drop to five-month low in May 2017

Bank Card Default Rate Rises Seven Straight Months

NEW YORK, JUNE 20, 2017: S&P Dow Jones Indices and Experian released today data through May 2017 for the S&P/Experian Consumer Credit Default Indices. The indices represent a comprehensive measure of changes in consumer credit defaults and show that the composite rate dropped four basis points from last month to 0.86%. In addition, the bank card default rate increased 18 basis points from April to 3.53%, auto loan defaults decreased five basis points from the previous month to 0.85%, and the first mortgage default rate dropped five basis points from April to 0.64%.

Four of the five major cities saw their default rates decrease in the month of May. New York experienced the largest decrease, down nine basis points from April to 1.01%. Los Angeles reported 0.66% for May, dropping three basis points from the previous month. Dallas came in at 0.67%, down two basis points from April. Miami was down one basis point from April to 1.29%. At 0.97%, Chicago was the only city reporting a default rate increase of three basis points from the previous month.

The National bank card default rate of 3.53% in May set a 48-month high. When comparing the bank card default rate among the four census divisions, the default rate in the South is considerably higher than the other three census divisions. The East South Central Census Region – comprised of Kentucky, Tennessee, Alabama, and Mississippi – has the highest bank card default rate. As per the Bureau of Labor Statistics, these states have some of the lowest median household income.  

“Easy come, easy go: bank cards where borrowing money requires simply swiping a credit card are experiencing rising defaults, while defaults on other kinds of consumer credit which depend on paperwork are flat or down,” says David  M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices. “Default rates on bank cards are at the highest level since May 2013, four years ago. In the past, default rates began to climb around the same time the growth of bank card credit outstanding began to slow. The year-over-year growth of bank card credit outstanding peaked at 6.8% last November and was at 5.7% in April, the latest figure available. Bank card defaults rose from 2.81% in November to 3.35% in April, and up to 3.53% in May.

“The pictures of auto loans and mortgages are quite different. Default rates for auto loans have drifted down in the last four months. At the beginning of the year there were reports of a sub-prime crisis in auto loans; these concerns seem to be behind us. The default rate on first mortgage remains at 1%, lower than the pre-crisis period. Rising home prices and increases in the equity mortgage borrowers have in their home are helping lower default rates. One factor in the difference between rising bank card defaults and stable defaults on mortgages and autos may be the difference in interest rates: about 4% on mortgages and 4.4% on auto loans, compared to 12%-18% on bank card loans.”

The table below summarizes the May 2017 results for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

S&P/Experian Consumer Credit Default Indices National Indices:

Index May 2017 Index Level April 2017 Index Level May 2016 Index Level
Composite 0.86 0.90 0.81
First Mortgage 0.64 0.69 0.63
Second Mortgage 0.54 0.51 0.51
Bank Card 3.53 3.35 3.11
Auto Loans 0.85 0.90 0.92

Source: S&P/Experian Consumer Credit Default Indices
Data through May 2017

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

Metropolitan Statistical Area May 2017 Index Level April 2017 Index Level May 2016 Index Level
New York 1.01 1.10 0.89
Chicago 0.97 0.94 0.98
Dallas 0.67 0.69 0.69
Los Angeles  0.66 0.69 0.67
Miami 1.29 1.30 1.27

Source: S&P/Experian Consumer Credit Default Indices
Data through May 2017

For more information about S&P Dow Jones Indices, please visit www.spdji.com.

ABOUT THE S&P/EXPERIAN CONSUMER CREDIT DEFAULT INDICES

Jointly developed by S&P Dow Jones Indices LLC and Experian, the S&P/Experian Consumer Credit Default Indices are published on the third Tuesday of each month at 9:00 am ET. They are constructed to 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.

For more information, please visit: www.consumercreditindices.standardandpoors.com.

ABOUT S&P DOW JONES INDICES

S&P Dow Jones Indices is the largest global resource for essential index-based concepts, data and research, and home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average®. More assets are invested in products based on our indices than based on any other provider in the world. With over 1,000,000 indices and more than 120 years of experience constructing innovative and transparent solutions, S&P Dow Jones Indices defines the way investors measure and trade the markets.

S&P Dow Jones Indices is a division of S&P Global (NYSE: SPGI), which provides essential intelligence for individuals, companies, and governments to make decisions with confidence. For more information, visit www.spdji.com.

FOR MORE INFORMATION:

David Blitzer
Managing Director and Chairman of Index Committee
New York, USA
(+1) 212 438 3907
david.blitzer@spglobal.com

Luke Shane
North America Communications
New York, USA
(+1) 212 438 8184
luke.shane@spglobal.com

Matt Tatham
Experian Public Relations
(+1) 917 446 7227
matt.tatham@experian.com

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 2015, we were named   one of the “World’s Most Innovative Companies” by Forbes magazine.

We employ approximately 17,000 people in 37 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São 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, 2016, was US$4.6 billion. 

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

Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.