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Consumer Credit Defaults Remain Steady

Phil Hall
Dec 20, 2016
First mortgage default rates remained unchanged between October and November

First mortgage default rates remained unchanged between October and November, while second mortgage default rates declined, according to data released by the S&P/Experian Consumer Credit Default Indices.

The first mortgage default rate stayed at 0.70 percent in November, unchanged from the previous month, while the second mortgage default rate slipped from 0.58 percent in October to 0.48 percent in November. Auto loan defaults also dropped, from 1.08 percent to one percent, but credit card defaults increased from 2.76 percent to 2.81 percent. The composite default rate remained unchanged at 0.87 percent.

“Recent data paint a picture of a strong economy, and lower consumer credit defaults reflect this,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Default rates are modestly lower than a year ago, even as continued strength in home sales, auto sales, and retail sales are supporting expanded use of consumer credit. Money market rates rose after Election Day, the Fed raised the target range for the Fed funds rate last week, and has indicated that further increases lie ahead. The favorable default trends are likely to be tested in 2017 as interest rates rise.”

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