June 23, 2015 1:04 am
Data from the Indices revealed the auto loan default rate dipped to a record low of 0.86 percent. The bank card default rate decreased to 2.98 percent – its largest decrease since 2013.
“Consumer credit default rates are below pre-crisis levels, at new lows and continue to drift down,” says David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “These low levels should not come as a surprise: interest rates haven’t turned up, consumer debt service as a proportion of household income is close to its record low, and the Federal Reserve reported that consumer wealth was at a peak in the first quarter of 2015.
“Nor should one assume that debt levels and defaults are low because no one is spending; on the contrary, May light vehicle sales were the highest since July 2005 and retail sales jumped. The economy looks good, consumers are spending and credit usage is rising. The combination of low debt service and economic expansion should ease worries about the fallout some fear when the Federal Reserve boosts interest rates,” Blitzer says.
Source: S&P/Experian Consumer Credit Default Indices
Published with permission from RISMedia.