Mortgage Default Rates Increase in September

Mortgage & Real Estate

Consumer credit defaults were higher for first and second mortgages in September from the previous month, according to the SP/Experian consumer credit default indices.

First mortgages went from 1.92% in August to 1.99% in September, while second mortgages jumped from 1.27% to 1.32% month-over-month. This is the first time first mortgage rates have gone up since November 2010.

Out of all the indices the report monitors, bank card default rates had the highest basis point monthly jump, going from 5.26% to 5.36%.

The overall composite consumer credit default rate was up to 2.1%, an increase of .6% from the previous month. This figure is down more than 1% from the same time period last year.

Among the five major Metropolitan Statistical Areas looked at in this report, New York had its highest default rates since April 2011, experiencing an increase from 1.8% in August to 2.01% in September.

Chicago, Los Angeles and Miami also saw credit defaults increase moderately month-over-month to 2.47%, 2.12% and 4.59% from 2.43%, 2.07% and 4.52%, respectively.

Dallas was the only MSA where default rates fell, from 1.51% in August to 1.33% in September.

“While this is only one month of data, we have not seen so many increases in default rates in about a year or more,” said David Blitzer, managing director and chairman of the index committee for SP indices. “For most of the past three years, consumer credit default rates have been declining across both loan types and regions. Given the fragile state of the economy and consumer confidence, we will have to closely monitor these data over the next few months to determine if September was just a temporary blip or the reversal of the recent trend.”

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