Black Knight: May Foreclosure Starts Lowest in 17 Years
Black Knight, Jacksonville, Fla., reported 44,900 foreclosure starts in May, the second-lowest such measure in more than 17 years.
The company’s First Look Mortgage Monitor said just 303,000 mortgages remain in active foreclosure; at 0.59 percent, the national foreclosure rate is at its lowest point in 15 years. At the current rate of decline, national foreclosure inventories are on pace to hit the pre-recession average (2000-2005) by the third quarter.
Black Knight attributed the drop in delinquencies–the fifth such monthly drop–to post-hurricane improvements in hurricane-affected areas more than offset slight increases in non-impacted markets in May, dropping the national delinquency rate to its lowest level in 15 months.
In a separate report, S&P Dow Jones Indices and Experian, New York, said credit default indices showed lower default rates across all categories in May.
The Consumer Credit Default Indices report said composite credit default index fell by three basis points in May to 0.89 percent. The first mortgage default rate declined by two basis points to 0.66 percent, while the the bank card default rate dropped two basis points to 3.84 percent and the auto loan default rate fell six basis points to 0.93 percent.
Three of the five major cities saw decreases in composite default rates in May. Chicago and Dallas each decreased two basis points, to 0.88 percent and 0.80 percent, respectively. The default rate for Miami in May 2018 fell by one basis point to 2.77 percent. New York increased by two basis points to 0.92 percent, while the rate for Los Angeles increased by three basis points to 0.62 percent.
“Consumers continue to pay their bills on time” said David Blitzer, Managing Director and Chairman of the Index Committee with S&P Dow Jones Indices. “With the economy turning in good numbers with low unemployment, low inflation and gradually rising wages, consumer credit default rates are flat to down. Consumer borrowing has recovered from the financial crisis. Mortgage debt outstanding fell 12.6 percent from its early 2008 peak to the bottom in 2014; now it remains roughly 6.1 percent below the peak.”
Looking ahead, Blitzer said there could be some concern about how long the moderate default rates can continue. Savings as a percentage of disposable income is declining,” he noted. “At the current level of 3 percent, it is near the low point seen in the boom before the financial crisis. While inflation remains low, wage growth is not very high and home prices are rising two to three times faster. Any rapid rise in defaults will wait for the next recession, whenever it comes.”
