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Consumer default rates rose in October for first time this year

November 20, 2012|By Jim Puzzanghera
  • Credit card logos on a downtown Atlanta storefront as a pedestrian passes in July.
Credit card logos on a downtown Atlanta storefront as a pedestrian passes… (David Goldman / Associated…)

WASHINGTON — After nine-straight months of improvement, consumers slipped in October in keeping up with their bills.

A closely followed composite index of defaults on mortgages, credit cards and auto loans increased last month after hitting a post-recession low in September.

Driven by higher defaults on first mortgages, the consumer credit default index released Tuesday by S&P Dow Jones Indices and credit reporting company Experian increased to a 1.55% rate in October from 1.46% the previous month.

The default rate for first mortgages rose to 1.47% from 1.36% in September. Second mortgage and auto loan default rates showed slight increases.

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The only major rate to improve was for credit cards, dropping to 3.68% in October from 3.7% the previous month. The October rate was a post-recession low.

David M. Blitzer, chairman of the index committee for S&P Dow Jones Indices, said the default rate increases last month were not a concern.

“Overall consumer credit quality remains healthy," he said.

All of the default indices were "at levels typical of the pre-crisis period of the early 2000s,"  Blitzer said.

Only the credit card default rate was above 2.5%, but it still was at a recent low and close to its minimum over the past eight years, he said.

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Of the five major cities tracked by S&P and Experian, only two — New York and Dallas — saw default rate increases in October.

New York's rate rose to 1.35% from 1.28% in September. Dallas saw the biggest increased, to 1.26% in October from 1.03% the previous month, but still had the lowest default rate among the five large cities.

Los Angeles and Chicago hit post-recession lows, while Miami also decreased.

Los Angeles had its third-straight monthly decrease in its overall consumer credit default rate, to 1.44% in October from 1.45% in September. Chicago's rate dropped to 1.78% in October from 1.82% the previous month.

ALSO:

Foreclosure filings drop to five-year low in September

U.S. families' debt loads decline to pre-recession levels

Most consumer default rates hit post-recession lows in September

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