First-mortgage defaults increase in January

by Francis Monfort23 Feb 2018

The rate of first-mortgage defaults increased to 0.72% in January from 0.68% in December and remained unchanged from the year-ago period, according to the Consumer Credit Default Indices released by S&P Dow Jones Indices and Experian.

David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said that in spite of an increase in home mortgage rates, there are still few signs of financial tightness or increased difficulties in qualifying for loans. Rates have risen from 4% to about 4.4% since the beginning of 2018.

Additionally, the indices showed that the composite rate increased four basis points from last month to 0.95%. The bank-card default rate rose 13 basis points to 3.57%, while the auto-loan default rate fell three basis points from December to 1.07%.

"The economy is growing, consumers are bullish, and they're spending money," Blitzer said. "We are seeing the usual result of spending growth: modest increases in consumer credit defaults – especially in bank cards – and overall increases in the level of debt in the economy. Neither the defaults nor the amount of debt outstanding are immediate problems.”

The composite rate has increased steadily over the past several months, primarily reflecting increasing bank-card default rates, which are up 42 basis points since September 2017 and have now reached a nearly four-year high.

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First-mortgage defaults up slightly in December
First-mortgage defaults drop in November