Contrary to what happens most times when the S&P/Experian Consumer Credit Default Indices are updated, the auto loan component made a move upward on a sequential basis while the other four elements watched by S&P Dow Jones Indices and Experian either stayed flat or declined.

However, analysts called the auto loan default uptick “scant” since it moved just 1 basis point higher in July from the previous month when the all-time low was established. The latest reading of 0.86 percent still is 10 basis points lower than a year earlier as the level has remained below 1 percent for four consecutive months.  

Meanwhile, the composite portion of the S&P/Experian Consumer Credit Default Indices — a comprehensive measure of changes in consumer credit defaults — posted a reading of 0.92 percent in July, which is 1 basis point lower from the previous month.

Analysts noted the first mortgage default rate was unchanged from the prior month with a rate of 0.80 percent. The second mortgage default rate also stayed flat in July versus the previous month, checking in with a default rate of 0.55 percent.

Registering the most movement of any component, the bank card default rate fell 9 basis points, to come in at 2.79 percent in July.

“Defaults rates across different loan types continue to follow the same pattern: bank card defaults are about 2 percentage points higher than auto loans or mortgages. This pattern has been in place through the history of the indices and is unlikely to shift anytime soon,” said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.

“Even the increase in the default rate for automobile loans was a scant 1 basis point,” Blitzer continued.

Looking at the geographic data analyst review regularly, they mentioned four of the five major cities saw their default rates increase in the month of July.

Chicago saw the biggest increase, reporting in at 1.15 percent, up 11 basis points from the previous month.

Miami reported a default rate of 1.45 percent, up 3 basis points from June.

Los Angeles and New York both recorded default rate increases of 1 basis point above the previous month at 0.89 percent and 0.92 percent, respectively.

Dallas was the only city in July to record a lower default rate compared to the prior month, checking in at 0.64 percent, which was 4 basis points on a sequential basis.

“Chicago did see a small bump up in defaults, bringing rates to levels seen at the start of the year,” Blitzer said. “However, given overall patterns, this is not a major worry.

“All five of the cities covered in the release have put the financial crisis behind them and are all at pre-crisis lows,” he continued. “The lack of any regional differences is another sign of improving individual financial conditions and a stable economy.”

Blitzer then offered his assessment of how the economy is behaving as a whole and the resulting impact on defaults.

“The stable consumer credit default rates confirm the recent economic improvements seen in the unemployment rate and GDP growth,” he said. “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 percent annually — or under 1 percent after inflation — which means that there is little margin for error should the economy stumble,” Blitzer went on to say.

“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,” he added.

Jointly developed by S&P Indices and Experian, analysts reiterated the S&P/Experian Consumer Credit Default Indices are published monthly with the intent to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien.

The indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month.

Experian’s base of data contributors includes leading banks and mortgage companies and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.