Mortgage Credit Default Rates ‘Marginally’ Down in December: S&P

In December 2013 national consumer credit default rates measured by the S&P/Experian Consumer Credit Default Indices declined on a month-over-month basis to 1.35% from 1.37% in November.

The first mortgage default rate dropped marginally from 1.28% to 1.27% in December. Similarly the second mortgage default rate decreased only 2 tenths of a basis point, from 0.78% in November to 0.76% in December.

Default rates in mortgages and all the other categories continue to follow a downward trend that indicates consumers' financial condition is improving, notes David Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices.

Other data that confirm the trend include a sharp decline in mortgage foreclosure rates in 2013 compared to 2012. Also, consumer debt service as a percentage of income measured by the Federal Reserve is at a record low while consumer credit usage is expanding.

Currently the indices remain at pre-financial crisis levels. Nonetheless performance differs state by state.

Four out of the five largest cities saw default rate increases.

Miami saw the highest increase to 2.74%, or 28 basis points higher than the previous month. Chicago, Los Angeles, Miami and New York “remain below default rates they posted a year ago in December 2012."

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