National Credit Default Rates Increase from Post-Recession Lows

Mortgage & Real Estate

Consumer credit default rates increased for the second straight month after hitting a post-recession low in September, according to the latest indices from SP/Experian.

The national credit default composite reached 1.64% in November, 18 basis points more than the low mark experienced in September. 

An uptick in first mortgage default rates was the sole reason why the national composite was higher, said David Blitzer, managing director and chairman of the index committee for SP Dow Jones Indices. First mortgage defaults posted 1.58% last month, 11 basis points above October and 22 basis points greater than the September low.

SP/Experian reported that first mortgage was the only product line that increased in November, as second mortgage, auto loan and bank card default rates all declined.

The second mortgage hit its historic low of 0.62% in November as it marginally decreased from the 0.65% rate posted in October.

Auto loan default rates moved down from 1.14% in October to 1.09% in November.

Meanwhile, bank card default rate posted a new post-recession low default rate of 3.58% in November, compared to 3.68% the prior month.

“While the increase in the first mortgage default rate is quite small, it bears watching since it repeats across four of the five cities we track,” Blitzer added. “The other sectors all posted small declines from October to November.”

Furthermore, four out of five cities covered in the indices saw increases in their default rates, led by Miami at 2.66% which is up 22 basis points month-over-month. Los Angeles and New York default rates also rose during this time period to 1.60% and 1.47%, which represents a monthly increase of 16 basis points and 12 basis points, respectively.

Only Dallas saw default rates slip one basis point from October to November, posting a mark of 1.25%.  

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