Mortgage Default Rates Decline Again

First and second mortgage default rates took a dip from February to March, according to the latest numbers in the S&P/Experian Consumer Credit Default Indices.

The first mortgage default reported a 0.77 percent rate for March, down seven basis points (bps) from the prior month and 15 bps below the March 2015 level. The second mortgage default rate last month was 0.59 percent, one bps below February’s level but nine bps above the same period one year earlier.

The composite rate of consumer credit defaults in March was 0.93 percent, down four bps from the previous month and 12 bps lower on a year-over-year measurement. However, bank card defaults were at a 2.92 percent rate, up considerably from February’s 2.56 percent.

“The rate of bank card defaults is both greater and more volatile than mortgage defaults,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Behind these figures are further differences in these borrowing patterns. Outstanding balances for bank cards, as measured by the Federal Reserve’s figures on revolving credit, were up 5.2 percent in 2015 compared to an increase of one percent for mortgages on one-to-four family residences. Bank card balances, which surged in the first half of 2014, leveled off somewhat until the start of 2015, and then accelerated again through the end of last year. They are down slightly for the first two months of 2016. Mortgage balances are quite different; until the last quarter of 2014, outstanding mortgage balances declined and then saw a small increase in 2015.”