S&P-Experian: Mortgage Default Rate Down Year Over Year In December
The national default rate on first mortgages increased slightly in December to 0.71% of all loans – up from 0.70% in November but down from 0.84% in December 2015, according to the S&P-Experian Consumer Credit Default Indices.
The default rate on second mortgages fell to 0.41%, down from 0.48% in November and down from 0.84% in December 2015.
The index also measures the default rates for auto loans and credit cards. The bank card default rate in December was 2.95%, up 14 basis points from November. The auto loan default rate was 1.03%, up three basis points from the previous month.
The composite default rate was 0.89%, up two basis points from November.
“National average consumer credit default rates continue at low levels in an improving economy,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. “Auto and light truck sales were up each month since August as automobile consumer credit defaults held steady. Bank card sector defaults ticked up slightly in the last two months, reversing five months of flat to down reports. This may reflect rising retail since the spring and larger consumer credit extensions in October and November.”
The report shows that mortgage default patterns are stable, as well, Blitzer says.
“However, this favorable picture is likely to be tested by rising interest rates,” he says. “Home mortgage rates rose by three-quarters of one percent since Election Day.”
ABA: Delinquencies On Home Equity Loans, Lines Of Credit Fell Further In Q3
Delinquencies on home equity loans and home equity lines of credit continued to fall in the third quarter, according to a recent report from the American Bankers Association (ABA).
Specifically, the delinquency rate for home equity loans fell 11 basis points to 2.59% of all accounts, dipping further below their 15-year average of 2.85%. Delinquencies for home equity lines of credit fell five basis points to 1.16% of all accounts – just one basis point above their 15-year average of 1.15%.
Meanwhile, delinquencies on property improvement loans increased three basis points to 0.94% of all accounts.
The report tracks delinquencies in 11 individual loan categories, also including credit cards. The composite delinquency rate increased slightly during the third quarter compared with the second quarter, meaning that although consumers are doing better at paying certain home loans on time, they got slightly behind on other types of loans.
The ABA report defines a delinquency as a late payment that is 30 days or more overdue.
“The three-year trend of declining home equity delinquencies reflects a healthier housing market and rising home values,” says James Chessen, chief economist for the ABA. “Borrowers are on much firmer financial footing than they were just a few years ago, and greater equity gives them additional motivation to stay current on their obligations.”