Mortgage Default Rates Down in May

Default rates on first and second mortgages declined in May, according to new data released in the S&P/Experian Consumer Credit Default Indices.

First mortgage defaults reported a 0.63 percent rate default rate for May, down six basis points from the prior month, while second mortgage defaults reported a 0.51 percent default rate, down seven points from April.

On the whole, composite rate of consumer defaults was 0.81 percent. Auto loan defaults were also down—a 0.92 percent default rate, down five basis points from April—but  bank card default rate increased two basis points in May, recording a default rate of 3.11 percent, up from April’s 3.09 percent default rate and the fifth consecutive month with an increase in bank card defaults.

“Overall the consumers’ credit picture is very good,” says David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Consumer credit default rates continue at the lowest levels in more than 10 years and well below those seen before the financial crisis. These positive developments are supported by continued gains in the economy: an unemployment rate under five percent, combined with increases in incomes and wages and stable prices. Debt service ratios remain close to record lows, while outstanding consumer credit and mortgage debt have risen modestly this year.”