S&P: Mortgage Default Rates Improve

Experian, New York, said first mortgage default rates fell to 0.63 percent in May, down by six basis points from April.

The S&P/Experian Consumer Credit Default Indices report said most indices showed improvement in May, with the exception of bank card defaults, which increased by two basis points to 3.11 percent. The overall composite rate fell by five basis points to 0.81 percent; auto loan defaults fell by five basis points to 0.92 percent.

“Overall the consumers’ credit picture is very good,” said David Blitzer, Managing Director and Chairman of the Index Committee with 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 5 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.”

Four of the five major cities measured by Experian saw their overall default rates decrease during May. New York recorded a default rate of 0.89 percent, down 12 basis points for the month. Dallas reported a default rate of 0.69 percent, down seven basis points from April. Chicago’s default rate decreased by five basis points from the prior month, posting a default rate of 0.98 percent. Los Angeles reported a default rate of 0.67 percent, down four basis points for May. Meanwhile, Miami’s default rate increased for the third consecutive month, up six basis points to 1.27 percent.

Blitzer noted while the current level of bank card defaults is quite low, the upward trend “stands out compared to the other data series.”