Skip to main content

First Mortgage Default Rate Remains Flat for Eighth Consecutive Month

Sep 21, 2012

Data through August 2012, released by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a measure of changes in consumer credit defaults, showed that most loan types saw a decrease in default rates including the national composite, which is now down for eight consecutive months. Four of the five loan types posted their lowest rate since the end of the 2007/2009 recession. Only the auto loan default rate increased, from 1.01 percent in July to 1.09 percent in August. The bank card default rate fell the most in August, from July’s 3.83 percent to 3.77 percent. The first mortgage default rate decreased slightly from 1.41 percent in July to 1.40 percent in August. At 0.72 percent, the second mortgage default rate fell to the lowest in its eight-plus year history. The composite index showed a post-recession low of 1.50 percent, slightly below July’s 1.51 percent. “While continuing to fall, most of the August changes in default rates were small compared to what we saw in the first half of the year” said David M. Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices. “As the consumers’ financial condition continues to improve their credit default rates showed small changes from July to August, in most cases the trend was either down or flat. “The auto loan rate rose eight basis points in August to 1.09 percent, but this was from July’s eight-plus year historic low. Bank card, first and second mortgage and composite default rates hit new postrecession lows. The first mortgage default rate has been down or flat for eight consecutive months, a good sign for the housing market. Second mortgage default rates were down in all but one of those same months. Bank card default rates fell the most in August, down six basis points to 3.77 percent, its lowest rate since February 2007, more than five years ago. “Miami’s default rate rose from July’s post-recession low—2.62 percent in August, up from July’s 2.39 percent. Dallas’ and Chicago’s rates also rose in August, to 1.07 percent and 1.92 percent, respectively. This was the second month that default rates rose in Dallas, but 1.07 percent is still the lowest of the five cities we publish. Los Angeles was the only city where the default rates fell in August; 1.60 percent versus July’s 1.67 percent, a post-recession low for that city. New York remained flat at its 1.49% post-recession low. “While there has been a bit of volatility among loan types and cities, the basic trend has not changed. Consumers are continuing to repair their balance sheets, as evidenced by diminishing default rates. For the housing market, there are still a substantial number of loans outstanding that defaulted in the past and that segment of the market is still of concern. But for 2012, the drop in mortgage default rates is a good sign for the housing market and the consumer.”
About the author
Published
Sep 21, 2012
Co-Founder Mat Grella Terminated From NEXA

NEXA CEO Kortas states negotiations regarding the buyout will continue.

Mar 27, 2024
Comings And Goings At AmeriHome

Chief Operating Officer John Hedlund announced his retirement on Thursday in a LinkedIn post.

Mar 22, 2024
Rocket's Tim Birkmeier To Retire

Birkmeier is bidding farewell after a 28-year career at Rocket Companies.

Mar 21, 2024
How NAR’s Settlement Impacts Homebuying

While the settlement's silver lining is that homes are expected to become more affordable, many uncertainties loom over the housing market.

Mar 19, 2024
NAR Reaches $418 Million Settlement

The association agreed to give home sellers the option of compensating agents.

Mar 15, 2024
U.S. Non-Bank Mortgage Lenders Surge Amid Industry Consolidation, Fitch Ratings Reports

As smaller players exit the market, scaled originators like UWM and PennyMac Financial dominate, but challenges persist with low origination volume and pressured margins amidst rising interest rates.

Mar 14, 2024