To mimic the famous Mark Twain quip, perhaps reports about the drastic demise of the auto finance industry are greatly exaggerated.

As some commentators latched onto delinquency metrics shared recently by the Federal Reserve Bank of the New York, auto default data contained in the latest the S&P/Experian Consumer Credit Default Indices showed improvements in January both on a sequential and year-over-year basis.

S&P Dow Jones Indices and Experian reported this week that the auto loan default rate in January fell 4 basis points from the previous month to 0.99 percent. The latest reading is also 8 basis points lower than the opening month of 2017.

As previously reported in SubPrime Auto Finance News, the New York Fed data attracted plenty of attention since it revealed more than 7 million contract holders were in delinquency. However, Fed analysts offered some perspective by drilling deeper into that information.

Default data compiled by S&P Dow Jones Indices and Experian showed that the auto metric has been below 1 percent for 8 of the past 12 months and currently sits 12 basis points below the high point analysts have seen during the past five years. That high-water mark for auto defaults was 1.11 percent recorded in January 2014 and again in October and November of 2017.

Meanwhile turning back to the January information, S&P Dow Jones Indices and Experian determined the composite rate — which represents a comprehensive measure of changes in consumer credit defaults ticked up 1 basis point from previous month to land at 0.90 percent.

Analysts noticed the bank card default rate rose 8 basis points to 3.42 percent, while the first mortgage default rate came in 2 basis points higher at 0.69 percent.

Looking at the five largest U.S. markets that S&P Dow Jones Indices and Experian watch for each monthly default update, three cities posted higher default rates in January compared to previous month.

The rate for Miami increased 26 basis points to 2.19 percent, while the rate for Dallas climbed 4 basis points to 0.89 percent.

New York’s default rate ticked up 3 basis points to 0.99 percent as the rate for Chicago remained unchanged in January at 0.88 percent

Finally, the rate for Los Angeles decreased 3 basis points to enjoy the lowest reading of these five cities at 0.49 percent.

Following a month where default rates for all loan types increased, David Blitzer pointed out January data showed default rates changed little from the prior month. The managing director and chairman of the Index Committee at S&P Dow Jones Indices explained the longer-term trend shows that default rates have mostly stabilized.

Blitzer added the composite rate has fluctuated within a narrow band as the last time this rate was more than 10 basis points off of the current level was nearly four years ago in March 2015.

“The uptick in the bank card default rate combined with a decline in the auto default rate reflects volatility in the consumer economy,” Blitzer said. “Coming off some swings in market sentiment and recovering from the government shut down, there was a sharp drop in December retail sales and a pullback in January automobiles sales.

“Consumer sentiment has also bounced around, but has recovered in the latest reports. Consumers and investors are both trying to discern which trends will shape the 2019 economy,” he continued.

Blitzer closed by making one more forward-looking point.

“Despite continuing uncertainty about economic policy, two factors favorable to the economy persist: low inflation and a strong labor market. These trends should support the economy and limit any increase in consumer credit default rates,” he said.

“The risks facing the economy in the first half of 2019 are in trade where tariffs or Brexit could upset things, and in the financial sector where worries about corporate earnings and anxiety of possible Fed rate hikes could spook the markets,” Blitzer went on to say.

Jointly developed by S&P Indices and Experian, analysts noted 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.