First-mortgage default rate holds steady despite rate increases

by Francis Monfort22 Mar 2018

The recent increases in mortgage rates do not appear to be influencing the default rate of first mortgages, according to S&P Dow Jones Indices.

The first-mortgage default rate continues to remain stable, remaining unchanged at 0.72% compared to January. Compared to the year-ago period, the default rate fell from 0.74%, according to the S&P/Experian Consumer Credit Default Indices.

The composite default rate was 0.96% in February, up one basis point from 0.95% in January. Like the first mortgage default rate, the default rate for auto loans was stable during the month at 1.09%. It increased two basis points from 1.07% in January. The rate also increased year over year from 1.05%.

Meanwhile, the bank-card default rate is at its highest level since October 2012 after five consecutive months of no declines. The rate increased seven basis points to 3.64% in February from 3.57% in January. A year ago, the default rate for bank cards was 3.22%.
"The overall consumer credit default picture continues to be favorable," said David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. "Default rates on first mortgages and auto loans are little changed in the past year or two. Recent small increases in mortgage and automobile loan interest rates do not appear to be affecting default trends. The currently favorable economic conditions – low unemployment, stable inflation, and expectations that current conditions will continue – all support the good credit default conditions.”


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