Consumer defaults ticked to the highest level in nine months as the national composite index inched up two basis points to 2.24%, data from S&P Indices and Experian shows.
“Led by the mortgage markets, the second half of 2011 saw a slight reversal of the two-year downward trend in consumer credit default rates,” says David M. Blitzer, a Managing Director at S&P Indices.”
First mortgage default rates moved slightly higher, to 2.19%, while auto loan delinquencies saw a 10 bps move, to 1.27%. Second mortgage defaults also increased to 1.33% from 1.26%.
Of all lending tracked, only bank card default rates posted a decline, down 31 basis points sequentially to 4.60% in December.
The higher rate follows news that consumer credit expanded at the fastest rate in a decade this November, up $20.3 billion.
At the start of the fourth quarter, Citi’s research arm issued a report on consumer defaults, expecting the rates to slowly start heading higher.
“Cards have had a two year tail wind of improving credit but are now at an inflection point where the second derivative has turned,” analysts at Citi wrote. “Delinquencies are improving at a slower rate and should flatten out for most issuers within a few months.”
S&P also tracked five cities in its report, with only New York seeing delinquency rates decline in December, now at 2.13%.
Miami was hardest hit, with default rates hitting 4.73%. Los Angeles and Dallas saw smaller increases, up to 2.54% and 1.56% during the month.
“Given what we know about the mortgage markets, it is likely that these cities are seeing this recent weakness because their housing markets have still not stabilised,” Blitzer said.