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Consumer Credit Default Rates in Narrow Range in August 2015 According to the S&P/Experian Consumer Credit Default Indices

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Four of the Five Cities Report Default Rate Increase in August 2015

NEW YORK, Sept. 15, 2015 /PRNewswire/ -- Data through August 2015, released today by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed small increases in numerous default rates. The composite rate was 0.96% in August, up four basis points from the previous month. The first mortgage default rate and the auto loan default rate also increased four basis points to 0.84% and 0.90%, respectively. The bank card default rate was the only rate to report a decrease in August at 2.71%, down eight basis points from the previous month.

Four of the five major cities saw their default rates increase in the month of August. New York saw the largest increase, reporting 1.04%, up 12 basis points from July. Dallas saw its default rate increase by seven basis points to 0.71% in August. Chicago reported its third consecutive increase with a 1.21% rate, up six basis points from the previous month. Miami reported a default rate of 1.46%, up one basis point for the month.  Los Angeles was down 13 basis points to 0.76%, the only city to report a decrease in August.

"The ongoing improvement in the consumer economy is reflected in consumer credit default rates," says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "In recent months, we have seen substantial job growth, increases in consumer spending, and a rise in consumer credit outstanding. Despite continued weak wage growth, consumer credit default rates remain in a narrow range at low pre-financial crisis levels. Two economic areas showing strength are auto sales and housing. Car and light truck sales saw recent gains reaching an annual rate of about 17.5 million units as sales of new homes and housing starts picked up. To reflect that the growth in credit is largely due to loosening of credit standards indicating banks are willing to bear increased risk by approving more sub-prime consumers  - which will lead the higher default  rates."

"With the Federal Reserve policy meeting on Wednesday and Thursday this week, analysts are debating the possible impact of an interest rate increase. Presumably, the Fed will raise interest rates, the question is whether it will be now, late this year, or sometime in the first half of 2016. Little initial impact is expected on consumer use of credit or on default rates. A quarter-point increase in the Fed funds rate will not affect fixed rate mortgage loans or auto financing. Some small increases in interest rates on bank cards and similar lending may occur in the months following Fed action. Adjustable rate mortgages tied to market rates will rise as mortgage loans reach dates when rates reset. Barring a pattern of rapid sustained interest rate increases from the Fed – which no one foresees – the near-term impact on consumer defaults will be very small. Immediate results of a Fed move will be seen in the stock and financial markets."

The table below summarizes the August 2015 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

August 2015
 Index Level

July 2015
 Index Level

August 2014
 Index Level



 Composite

0.96

0.92

1.03


 First Mortgage

0.84

0.80

0.91


 Second Mortgage

0.57

0.55

0.51


 Bank Card

2.71

2.79

2.73


 Auto Loans

0.90

0.86

1.00


                             Source: S&P/Experian Consumer Credit Default Indices


                             Data through August 2015




 

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

Metropolitan
Statistical Area

August 2015
 Index Level

July 2015
 Index Level

August 2014
 Index Level



New York

1.04

0.92

1.07


Chicago

1.21

1.15

1.17


Dallas

0.71

0.64

0.80


Los Angeles

0.76

0.89

0.72


Miami

1.46

1.45

1.45


                             Source: S&P/Experian Consumer Credit Default Indices


                             Data through August 2015




 

About S&P Dow Jones Indices
S&P Dow Jones Indices LLC, a part of McGraw Hill Financial, is the world's largest, global resource for index-based concepts, data and research. Home to iconic financial market indicators, such as the S&P 500® and the Dow Jones Industrial Average, S&P Dow Jones Indices LLC has over 115 years of experience constructing innovative and transparent solutions that fulfill the needs of investors. More assets are invested in products based upon our indices than any other provider in the world. With over 1,000,000 indices covering a wide range of asset classes across the globe, S&P Dow Jones Indices LLC defines the way investors measure and trade the markets. To learn more about our company, please visit www.spdji.com

Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC, a part of McGraw Hill Financial. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones").  These trademarks have been licensed to S&P Dow Jones Indices LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (collectively "S&P Dow Jones Indices") do not sponsor, endorse, sell, or promote any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. This document does not constitute an offer of services in jurisdictions where S&P Dow Jones Indices does not have the necessary licenses. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties.

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 2014, we were named by Forbes magazine as one of the "World's Most Innovative Companies."

We employ approximately 16,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and Sao 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, 2014, was US$4.8 billion.

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

For more information:

Dave Guarino
Communications
S&P Dow Jones Indices
dave.guarino@spdji.com
(+1) 212-438-1471

David Blitzer
Managing Director and Chairman of the Index Committee
S&P Dow Jones Indices
david.blitzer@spdji.com
(+1) 212-438-3907

Jordan Takeyama
Experian Public Relations
jordan.takeyama@experian.com
(+1) 714-830-7561

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.

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Without limiting the foregoing, the Indices are calculated by S&P Dow Jones Indices and its third party licensors based on a sampling of data reported to S&P Dow Jones Indices or its third party licensor from third parties, and neither S&P Dow Jones Indices nor its third party licensors verify the adequacy, accuracy, timeliness or completeness of such data.  Neither S&P Dow Jones Indices nor its third party licensor guarantee that such data and/or the sampling thereof shall be representative of the rate of actual consumer credit default or of any other attribute or activity. 

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SOURCE S&P Dow Jones Indices

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