Bank cards were the only type of consumer debt to see a decline in defaults during December according to data released today by S&P Indices and Experian.  The S&P Experian Consumer Credit Default Indices showed increased defaults in both first and second mortgages and in auto loans.  Driven primarily by the increase in mortgage defaults, the national composite index rose from 2.22 percent in November to 2.24 percent in December, the highest rate since April of 2011.  In December 2010 the Index stood at 3.01 percent.

The default rate for second mortgages increased from 1.26 percent to 1.33 percent, auto loan defaults rose to 1.27 percent from 1.17 percent and first mortgage defaults increased to 2.19 percent from 2.17 percent.  The default rate for bank cards however dropped from 4.91 percent to 4.60 percent.  All rates have improved from those of one year earlier when the default rate for second mortgages was 1.74 percent; first mortgages, 2.93 percent; auto loans, 1.69 percent; and bank cards, 6.73 percent.

"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, Managing Director and Chairman of the Index Committee for S&P Indices. "First mortgage default rates rose for the fourth consecutive month, as did the composite. Since August, first mortgage default rates have risen from 1.92% to the 2.19%. The composite also rose those months, from 2.04% to 2.24%.  The recent weakness seen in home prices is reflected in these data.  Bank card default rates, on the other hand, were favorable, falling to 4.6% in December. This is more than a full percentage point below the 5.64% we saw as recently as July 2011.

S&P Experian data highlighted five Metropolitan Statistical Areas (MSAs).  Three of the five showed increases in default rates for the month: Miami increased from 4.47 percent to 4.73 percent; Dallas from 1.38 percent to 1.56 percent, and Los Angeles to 2.54 percent from 2.53 percent.  Chicago was unchanged at 2.84 percent and New York decreased from 2.21 percent n November to 2.13 percent in December. 

Blitzer said of the MSA data, "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 stabilized."