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Consumer Loan Defaults Hit New Lows while Mortgage Defaults Rise
Default rates for first mortgage loans
increased in both October and November according to the S&P Dow Jones
Indices and Experian. The increases drove
the national default rate up from a post recession low reached in September despite
continued improvements in the performance of second mortgage, credit card, and auto loans.
The national composite index increased
from 1.46 percent in September to 1.55 percent in October and 1.64 percent in
November. First mortgages had also hit a
post-recession low in September of 1.36 percent but rose 11 basis points in
October and reached 1.48 percent in November.
In contrast auto loan defaults rates dropped from 1.14 percent in
October to 1.09 percent in November and second mortgages decreased slightly
from 0.65 percent in October to 0.62 percent, a historic low. The bank card default rate is at a new
post-recession low after falling 10 basis points to 3.58 percent.
"The national composite showed an
increase in consumer credit default rates for the second consecutive month in
November", says David M. Blitzer, Managing Director and Chairman of the Index
Committee for S&P Dow Jones Indices. "This increase in national default
rates was solely driven by an increase in the first mortgage default rate. All
other loan types - auto loan, bank card and the second mortgage posted
decreases in their default rates in November.
"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. The
other sectors all posted small declines from October to November: auto loans down
5 basis points, bank cards down 10 basis points to a new post-recession low of
3.58% and second mortgages down 3 basis points."
"Four out of five cities we cover showed increases in their default rates.
Dallas saw defaults slip one basis point. The increases were Miami, up 22 basis
points, Los Angeles up 16, New York up 12 and Chicago higher by 7 basis
points. Miami had the highest default rate at 2.66% and New York was
lowest at 1.47%."
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