DJ/Experian: December Default Rates Edge Up
S&P Dow Jones Indices and Experian, New York, reported an uptick in overall credit default rates in December, including a slight increase in the first mortgage default rate.
The S&P/Experian Consumer Credit Default Indices reported a two basis-point increase in the composite rate, to 0.89 percent. The first mortgage default rate came in at 0.71 percent, up one basis point from November. The bank card default rate rose to 2.95 percent, up 14 basis points from November. Auto loan defaults came in at 1.03 percent, up three basis points.
Four of the five major cities saw their default rates increase in December. Miami saw the largest increase, reporting 1.53 percent, up nine basis points from November. Chicago and Los Angeles both reported two basis point increases from last month at 0.98 percent and 0.72 percent, respectively. Dallas saw its default rate increase, up one basis point, to 0.67 percent. New York was the only city reporting a default rate decrease, of four basis points, to 0.87%.
The report said Miami’s default rate represented a 30-month high, unseen since June 2014. Upon further analysis of Miami’s default rate composition, Miami’s first mortgage default rate in December came in considerably higher than the South’s first mortgage default rate and the national first mortgage default rate. The South’s first mortgage default rate is higher than the national default rate.
“National average consumer credit default rates continue at low levels in an improving economy,” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “Nationally, mortgage default patterns are also stable. This favorable picture is likely to be tested by rising interest rates; home mortgage rates rose by three-quarters of one percent since Election Day.”
The report noted while Miami has a larger and increasing first mortgage foreclosure rate, home prices in Miami, as in most cities, have recovered from the financial crisis. However, Miami home prices, as measured by the S&P CoreLogic Case-Shiller Home Price Index, as of October were 22 percent below their December 2006 peak, while nationally, home prices have recently surpassed the pre-crisis peak set in July 2006. Florida also ranks among the five highest states with the most foreclosures in 2016.
