Mortgage Debt Fuels Overall Consumer Credit Default Rates

Mortgage Debt Fuels Overall Consumer Credit Default Rates The mortgage markets helped to fuel an overall increase in consumer credit defaults during December 2011, according to new data released by the S&P/Experian Consumer Credit Default Indices.

‘Led by the mortgage markets, the second half of 2011 saw a slight reversal of the two-year downward trend in consumer credit default rates,’ says David M. Blitzer, managing director and chairman of the index committee for S&P Indices. ‘First-mortgage default rates rose for the fourth consecutive month, as did the composite. Since August, first mortgage default rates have risen from 1.92 percent to 2.19 percent. The composite also rose those months, from 2.04 percent to 2.24 percent. The recent weakness seen in home prices is reflected in these data.

‘Looking at the five highlighted cities, three of the five had higher default rates,’ Blitzer continues. ‘Miami had the largest increase, moving from 4.47 percent in November to 4.73 percent in December. Dallas rose from 1.38 percent to 1.56 percent, but remained the lowest among the five cities we follow. Los Angeles default rates have risen for four consecutive months. Given what we know about the mortgage markets, it is likely that these cities are seeing this recent weakness because their housing markets have still not stabilized.’


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