Survey: Share of disposable income going to mortgage debt hits 36-year low

by Ryan Smith19 May 2016
The percentage of consumers’ disposable income going toward mortgage debt has hit its lowest level since 1980, according to new data from Standard & Poor’s and Experian.

Consumer credit defaults as a whole were also down, according to the S&P/Experian Consumer Credit Default Indices. Credit defaults as a whole hit a rate of 0.86% in April, a drop of seven basis points from the previous month. First mortgage defaults were also down, posting an eight-basis-point drop to a rate of 0.69% for April. Credit card defaults, however, climbed 17 basis points last month, hitting a rate of 3.09%.

“For two months, the overall consumer credit default rate has dropped to new lows while the default rate on bank cards has climbed,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “Since the financial crisis, consumers are paying more attention to their debts, particularly longer term financial commitments such as homes and autos. The Mortgage Debt Service Ratio – the percentage of disposable income going to service mortgage debt – is at its lowest point since 1980. The Total Debt Service Ratio, which includes loans with scheduled payments, is close to a record low.”

The index also revealed that the consumer savings rate is not about 5% of disposable income, higher than it was in 2005-2006.


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