Monday, January 24, 2011

Consumer Credit Improving

For those investing in bank stocks it’s important to keep an eye on the big picture trends regarding credit defaults.  Credit defaults dramatically improved from November to December and also year over year.  The following data is from the S&P/Experian Consumer Credit Default Indices. 



Nov/Dec
Yr/Yr
First Mortgage
-4.3%
-38.6%
Second Mortgage
-3.1%
-50.8%
Bank Card
-1.8%
-17.7%
Auto Loans
-4.5%
-36.9%


I especially like the data on the Second Mortgages.  For most banks, the loan losses on second mortgages are huge.  This is particularly good news for a number of the large banks, which have a sizeable number of these types of loans.   

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