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Auto Loan Defaults On the Rise

August 17, 2010
2 min to read


NEW YORK – Monthly default rates for auto loans and second mortgages have increased through July, while rates decreased for first mortgages and bank car loans, according to new data released today by Standard & Poor’s and Experian.


Defaulting balances were 8.2 percent in July, down from 8.8 percent in June for the bank card loans, and 3.2 percent, down from June's 3.3 percent, for first mortgages. Auto and second mortgage default rates increased to 1.9 percent and 2.8 percent, respectively, from 1.6 percent and 2.4 percent in June.

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"After seeing consumer credit defaults decline in recent months, this data shows rising defaults in four of the five highlighted cities and nationally in second mortgages and auto loans,” said David Blitzer, managing director of the Index Committee at S&P. “While it is too soon to tell if this is a momentary aberration or a major shift, combined with some economic news, this data does raise concerns.


Blitzer added that while the largest category, first mortgages, continues to see improvement in default patters, auto loans saw defaults rise after six straight months of declines. Among the highlighted cities in the report, only Los Angeles saw lower consumer defaults in July compared to the first half of the year, when, at most, one of the five cities saw worsening defaults in any month.


Consumer credit defaults vary across major cities and regions of the United States. Among the five major Metropolitan Statistical Areas reported each month in this release, New York had the largest increase in defaults in the last month at 6.99 percent. Los Angeles was the only one of the five MSAs to experience a decrease this month of 3.46 percent. The sharpest decline in the last 12 months continues to be in Miami with 46.21 percent.

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