S&P/Experian: Default Rate On First Mortgages Ticked Up Slightly In December

The default rate on first mortgages in December was about 0.84%, an increase of two basis points compared with November, when the default rate was about 0.82%, according to the S&P/Experian Consumer Credit Default Indices.

The report also measures the default rates for credit cards and auto loans. The composite default rate of all three loan types in December was 0.97%, unchanged from the previous month. The bank card default rate decreased 42 basis points to reach 2.49%. The auto loan default rate was 1.04%, unchanged in comparison with November.

‘The consumer economy looks good,’ says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. ‘Consumer credit default rates are low and stable, and consumer sentiment measures are upbeat. Personal consumption expenditures rose two percent in 2015 (December to December), with spending on durable goods up 4.8 percent for the same period. Auto sales continued strong at the end of last year. Real disposable personal income rose 3.7 percent in the year to the third quarter of 2015. There was no response among consumers to the Fed’s recent rate increase, no rush to apply for mortgages.

‘While the economic news on Main Street is good, the New Year opened with turmoil on Wall Street, as stock prices dropped in the opening week and the market crossed the -10 percent correction mark in the second week,’ Blitzer continues. ‘The two factors being cited for weakness on Wall Street are the strong dollar and weak oil prices. For consumers, both of these are good stories – cheap gas and lower prices on imports. Other parts of the economy also favor consumer spending: The unemployment rate is down to five percent, and the weekly initial unemployment claims reports signal further economic growth. Inflation remains low – lower than the Federal Reserve would like. Consumers aren’t showing any signs of anxiety driven by the stock market.’


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