The consumer credit default rate reached a new post-recession low in April, according to S&P Dow Jones Indices and Experian.
The S&P/Experian Consumer Credit Default Indices, a measure of changes in consumer credit defaults, fell 7Â basis points on the month to a composite rate of 0.86 percent.
The bank card default rate climbed for the fourth consecutive month in April to 3.09 percent, increasing 17 basis points from the previous the month and 60 basis points year-to-date.
Meanwhile, the mortgage debt service ratio, which measures the percentage of disposable income going to service mortgage debt, is at its lowest point since 1980. The total debt service ratio, which includes loans with scheduled payments, is also close to a record low. The savings rate is now at about 5 percent of disposable income, slightly higher than its level in 2004 through 2006.
“For two months, the overall consumer credit default rate has dropped to new lows while the default rate on bank cards has climbed,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.
Blitzer said that since the financial crisis, consumers are paying more attention to their debts, particularly “longer term financial commitments such as homes and autos.” Bank card, auto, and mortgage default rates are all lower than their pre-financial crisis levels, though the bank card rate is more volatile and sensitive to consumer spending trends.
“Whether the default pattern for bank cards stabilizes remains to be seen,” Blitzer said.
Additionally, three of five major U.S. cities saw their overall default rates increase during April. New York”™s default rate increased 2Â basis points on the month to 1.01 percent. Miami reported a default rate of 1.21 percent, up 6Â basis points from March, while Dallas reported a default rate of 0.76 percent, a 1Â basis point increase from the prior month. Chicago”™s default rate remained flat at 1.03Â percent. Los Angeles was the only city to report a default rate decrease. Its rate fell 10 basis points to 0.71 percent.
