Consumers’ credit reports may be looking better, as a new report indicates the default rate of consumer credit decreased notably in March.
According to the S&P/Experian Consumer Credit Default Indices for the final month of the first quarter, all types of consumer loans experienced a drop in default rates. The national composite slipped to 1.96 percent in March from 2.09 percent the month before. A year earlier, the rate was 2.43 percent, which shows consumers have improved their payment habits substantially since that time.
“The first quarter of 2012 was largely positive for the consumer,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “Not only have we resumed the downward trend in consumer default rates that began in the spring of 2009, but we appear to be reaching new lows across most loan types.”
Considerable declines in default rates for all major types of loans, including first and second mortgages and auto loans, reached their lowest point since the recession, Blitzer added.
The Indices reports the rate of default for first mortgages in March was 1.88 percent—slightly below the 2.02 percent recorded in February. Additionally, second mortgages saw a fall in its default rate, decreasing from 1.2 percent in February to 1.03 percent a month later. Meanwhile, the default rate for auto loans declined from 1.22 to 1.11 percent month-to-month.
In terms of location, of the five metropolitan statistical areas covered in the report, Miami saw the biggest decline in its default rate, which plummeted from 4.54 to 3.62 percent in March. Chicago also experienced a marked drop in its rate, which fell from 2.71 to 2.35 percent on a monthly basis.
The only MSA not to see its rate drop from February was Los Angeles. The city’s default rate crept up to 1.88 percent.