S&P/Experian: Default Rate On First-Lien Mortgages Stayed Flat In January

The default rate on first-lien mortgages in January was about 0.84%, flat compared with December, according to the S&P/Experian Consumer Credit Default Indices.

In December, the default rate on first-lien mortgages increased to 0.84%, up from 0.82% in November.

The report also measures the default rates for credit cards and auto loans. The composite default rate of all three loan types in January was 0.96%, down slightly from 0.97% in December.

The bank card default rate was 2.52%, an increase of three basis points compared with December. The auto loan default rate was 1.04%, unchanged in comparison with December.

“Nationally, consumer default rates were little changed in January,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a release. “Bank card defaults rose from November to December and again to January. However, the series established a new low point in November and remains quite low compared to its recent history. Moreover, the small decline in first mortgage defaults offset any damage in bank cards. On a regional basis, the five cities noted in the release bounced around, but none appeared to be warning of future difficulties.

“The economy is taking on something of a split personality,” Blitzer adds. “The financial markets are suffering falling prices and a lot of volatility so far in 2016. The stock market is down about one percent, interest rates remain extremely low despite the Fed’s action in December, and concerns about corporate earnings and credit are widespread.

“At the same time, home prices continue to climb, new home building is rebounding, and auto sales have been quite strong,” he continues. “The unemployment rate ticked down to 4.9% in January. Consumers do not appear to be overly worried about the stock market; their spending patterns haven’t collapsed. Given further modest job growth and continued low inflation, there is no basis for near-term worries over consumer spending.”


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