Mortgage Default Rates Continue to Rise

Increasedrnmortgage defaults pushed the overall consumer default rate up in December forrnthe third consecutive month.  Thernnational S&P Experian Consumer Credit Default Index hit a post recessionrnlow of 1.46 percent in September but then went to 1.55 percent in October, 1.64rnpercent in November, and 1.72 percent in December.  </p

The index forrnfirst mortgage defaults showed the same pattern.  After reaching a post-recession low of 1.36rnpercent in September it increased to 1.47 percent, 1.58 percent, and 1.68rnpercent over the next three months.  Thernsecond mortgage default rate, which was at a historic low of 0.62 percent inrnNovember rose to 0.69 percent in December. rnDefault rates on non-mortgage debt performed a little better; auto loanrndefaults were unchanged from November at 1.09 percent while bank card defaultsrndropped five basis points to 3.53 percent.</p

“Overall, 2012 showed improvement in consumer credit quality”, says David M. Blitzer, ManagingrnDirector and Chairman of thernIndex Committee for S&P DowrnJones Indices. “However, fourthrnquarter consumer default rates reversed some of the recent declines and pushed the composite default rate above its level of last May. The principal culprits were first and second mortgages. Default rates forrnauto loans were roughly stable over the year and default rates for bank cards continued to drop. All loanrntypes remain below their respective levels a year ago.”</p

“All five cities we cover showed increases in their default rates in December. The major increases were Miami, up 41 basis points, Chicago up 27, and Los Angeles up 24 basis points. New York and Dallas were marginally higher by four and one basis points. Miami had the highest default rate at 3.07% and Dallas – the lowest at 1.26%. All five cities remain below default rates they posted a year ago, inrnDecember 2011.”

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