Experian: Credit Default Rates Up; Home Prices Show Modest Uptick

Consumer credit default rates rose by five basis points in October, the Standard & Poor’s/Experian Credit Default Indices reported yesterday.  

The overall index rose to 0.94 percent in October, up from 0.89 percent in September. The auto loan default rate rose to 1.00 percent, up eight basis points for October. The first mortgage default reported in at 0.81 percent, up five basis points from the previous month. The bank card default rate was the only rate to decline in October, reporting at 2.75 percent for the month, a decrease of two basis points.  

Three of the five major cities saw their default rates increase in October. Miami reported a 1.29 percent default rate, up 22 basis points from September. New York saw its default rate increase by five basis points to 0.95 percent. Dallas reported an 0.75 percent default rate in October, up four basis points. Chicago and Los Angeles both saw their default rates decrease by two basis points, coming in at 1.07 percent and 0.72 percent, respectively.  

“Despite recent modest increases, consumer credit default rates remain at low levels,” said David Blitzer, managing director and chairman of the Index Committee with S&P Dow Jones Indices.

Also yesterday, FNC, Oxford, Miss., said its Residential Price Index showed U.S. home prices rose by 0.2 percent in September and by 1.7 percent in the third quarter, down from 3.5 percent in the second quarter. Year over year, the index showed prices rose by 6.1 percent.  

“Since July, the price growth has been in low gear despite the fact that the industry data continues to point to a persistent inventory shortage. In the meantime, mortgage rates continue to hover near historical lows amid loosening credit availability,” said Yanling Mayer, FNC housing economist and director of research. “On the demand side, slowing consumer spending in recent months, as well as weak inflation, is a telltale sign that there remains a great deal of economic uncertainty, which for the most part is holding back would-be homebuyers.”  

FNC said as of September, the proportion of final sales for foreclosed and REO properties composed nearly 10 percent of all existing homes sales, up slightly from 9.3 percent in August but down by nearly one percentage point from a year ago. Mayer said foreclosure sales typically move along a seasonal uptrend starting in September as normal home-buying activity levels off and lenders intensify disposal of foreclosed and REO properties as the cold winter months approach.  

In the for-sale market, average asking price discount among closed sales rose slightly from August’s 3.3 percent to 3.5 percent. Preliminary October estimates indicate a continued gradual seasonal uptrend.