The default rate on first mortgages increased a single basis point in December compared with November but was down 13 basis points over the same month last year, according to the SP/Experian Consumer Credit Default Indices.
But rising interest rates are likely to result in more loans going into default in the future.
For December, the first mortgage default rate was 0.71%, compared with 0.7% in November and 0.84% for December 2015.
There was a 2-basis-point month-to-month increase in the overall default rate, which also includes second mortgages, bank credit cards and auto loans, to 0.89%. A year ago, the overall default rate was 0.97%.
Second mortgage defaults fell to 0.41% from 0.48% in November and 0.67% in December 2015.
The bank card default rate was 2.95% in December, compared with 2.81% in November and 2.49% one year ago. The auto loan default rate was 1.03%, compared with 1% in November and 1.04% in December 2015.
Going forward, the picture for mortgage defaults is unlikely to be as rosy, said David Blitzer, managing director and chairman of the index committee at SP Dow Jones Indices.
“Nationally, mortgage default patterns are stable. This favorable picture is likely to be tested by rising interest rates; home mortgage rates rose by three-quarters of 1% since Election Day,” he said.
Miami’s default rate was of particular concern. The overall default rate is 1.53% and is the highest in 30 months, primarily because of what was happening with first mortgages. For December, the city’s first mortgage default rate was higher than the South’s regional rate, which in turn was higher than the national rate.
Home price trends might have something to do with why Miami’s default rate has worsened. “Home prices in Miami, as in most cities, have recovered from the financial crisis. However, Miami home prices, as measured by the SP CoreLogic Case-Shiller Home Price Index as of October 2016, were 22% below their December 2006 peak, while nationally, home prices have recently surpassed the precrisis peak set in July 2006. Florida also lags national trends in other measures — it is among the five states with the most foreclosures in 2016,” Blitzer said.