Mortgage defaults held steady through July even as composite and bank card default rates declined, according to S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices.

The first mortgage default rate was unchanged from the prior month with a rate of 0.80%.

The composite rate posted a 0.92% default rate in July, one basis point down from the previous month.

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(Source: S&P Dow Jones)

The auto loan default rate reported 0.86%, a one basis point increase from the previous month. The bank card default rate fell nine basis points, reporting 2.79% in July. The second mortgage default rate was unchanged from the previous month, reporting a default rate of 0.55%.

Four of the five major cities saw their default rates increase in the month of July. Chicago saw the biggest increase, reporting 1.15%, up 11 basis points from the previous month. Miami reported a default rate of 1.45%, up three basis points from June. Los Angeles and New York both recorded default rate increases of 1 basis point over the previous month, at 0.89% and 0.92%, respectively. Dallas was the only city in July to record a lower default rate compared to the prior month, reporting a 0.64%, down four basis points.

“The stable consumer credit default rates confirm the recent economic improvements seen in the unemployment rate and GDP growth,” says David Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Recent increases in outstanding consumer credit combined with stable default rates and strong consumer sentiment point to stable individual financial conditions.

“However, wage increases are running at about 2% annually – or under 1% after inflation – which means that there is little margin for error should the economy stumble. At the same time, concerns over the impact of an expected Federal Reserve rate increase are exaggerated. Interest rates on consumer loans are unlikely to be affected and no immediate economic fallout is anticipated,” Blitzer said.

Click to enlarge

(Source: S&P Dow Jones)

Here’s a rundown:

  • The composite index posted a historical low of 0.92% in July, one basis point down from the previous month.
     
  • The auto loan default rate reported 0.86%, a one basis point increase from the previous month.
     
  • The first mortgage default rate was unchanged from the prior month with a rate of 0.80%.
     
  • The bank card default rate fell nine basis points, reporting 2.79% in July.

Four of the five major cities saw their default rates increase in the month of July.

  • Chicago saw the biggest increase, reporting 1.15%, up 11 basis points from the previous month.
     
  • Miami reported a default rate of 1.45%, up three basis points from June.
     
  • Los Angeles and New York both recorded default rate increases of 1 basis point over the previous month, at 0.89% and 0.92%, respectively.
     
  • Dallas was the only city in July to record a lower default rate compared to the prior month, reporting a 0.64%, down four basis points.