Experian: Mortgage Default Rates a Yearly High

S&P Dow Jones Indices and Experian, New York, said despite composite credit default rates holding steady in March, the first mortgage default rate reached its highest rate in a year and bank card defaults rose for the fifth straight month.

The S&P/Experian Consumer Credit Default Indices reported the composite rate unchanged from last month at 0.94% in March. The first mortgage default rate came in at 0.75%, up one basis point from February and reaching a one-year high. The bank card default rate recorded a 3.31% default rate, up nine basis points from February. Auto loan defaults came in at 1.00%, down five basis points from the previous month.

For the five major cities measured in the report, two cities came in higher, while three saw lower default rates. New York had the largest increase, reporting 1.09%, up 15 basis points from February. Chicago reported 1.05% for March, rising six basis points from the previous month. Miami came in at 1.40%, down two basis points from February. Dallas reported a decrease of four basis points at 0.79%. Los Angeles saw its first default rate decrease since September 2016, down five basis points at 0.75%.

The national bank card default rate of 3.31% in March sets a 45-month high. When comparing the bank card default rate among the four census divisions, the bank card default rate in the South is considerably higher than the other three census divisions. Kentucky, Tennessee, Alabama and Mississippi had the highest bank card default rate.

“The continuing low consumer credit default rate reflects recent strong job growth and a favorable economy,” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “The economy is also supporting consumers’ positive outlook and strong sentiment about the economy and their financial condition.”

Blitzer said higher interest rates that most analysts expect over 2017-2018 are likely to combine with continued growth in consumer credit to push the debt service ratio back towards the 6% level.