Experian: Decreases in Default Rates for First and Second Mortgages

First- and second-mortgage default rates are down through July 2011, according to S&P/Experian Consumer Credit Default Indices.

These data are a comprehensive measure of changes in consumer credit defaults and it showed that second-mortgage default rates experienced the largest decrease in July from 1.4% to 1.25%. First-mortgage and bank-card default rates decreased to 1.93% and 5.64%, respectively, from June rates of 2.02% and 5.69%.

“By and large, July's data support the downward trend we have observed over the past two years. Despite high unemployment rates, consumers continue to improve their financial positions, resulting in lower default rates than we were seeing during the recession,” said David Blitzer, managing director and chairman of the index committee for S&P Indices.

“All indices show default rates well below where they were in 2008 and 2009.”

Consumer credit defaults varied in major cities across the country. Among the five major metropolitan statistical areas looked at in this report every month, Dallas was the only city to experience an increase in default rates, up to 1.6% in July from 1.59% in June.

Los Angeles and Miami decreased moderately to 2.15% and 5.37%, respectively, from 2.17% and 5.41%, while New York and Chicago saw default rates decrease to 1.8% and 2.54% in July, from 1.82% and 2.59% in June.

“Occasional increases in some of the regional composites suggest that default rates may not fall a lot farther,” Blitzer said. “While recording the highest default rate of the five cities we report, Miami is still far off the near -19% it had reported two years ago. However, the sluggish economies in both Miami and Chicago appear to be having a more severe impact on their residents than some of the other markets. Recent housing data has also pointed to weakness in these two markets beyond the national averages.”