Higher Mortgage Default Rates in December

The default rate on first mortgage loans rose to 1.02% in December 2014 from 0.97% in November. This is revealed in the latest report on Consumer Credit Default Indices conducted by S&P and Experian.

In December, the first-mortgage default rate experienced its highest month-over-month increase since September 2013 after following an upward trend for five consecutive months. Despite the monthly increase, it was lower compared to December 2013 undergoing a decline on a year-over-year basis. Back then the first-mortgage default rate was 1.27%.
The default rate on second mortgage loans also rose in December compared to November. It climbed to 0.59% up from 0.48%. Despite the month-over-month increase, the second-mortgage default rate remained lower in December 2014 compared to the same month one year ago. Back then it was 0.76%.

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The composite index showing the national consumer credit default rates rose to 1.11% in December from 1.07%. It has been increasing for five months in a row along with the first-mortgage default index. On a year-over-year basis, the composite index experienced a decline. In December 2013, the national consumer credit default rate was 1.35%.

The managing director and chairman of the Index Committee for S&P, David Blitzer, commented that the economy is becoming stronger and consumer spending is rising, but wages have experienced little improvement. He explained that the large decline in oil prices will have a positive impact on the disposable income of consumers and this should reduce the financial stress which they are under. He also said that the default rates in the U.S. remain low, but if the trend for increase gains strength, this could be a cause for concern.

Blitzer revealed that New York, Chicago, Dallas and Los Angeles all reported rise in the consumer credit default rate in December compared to November. Still, the default rates in these cities remained below their levels of December 2013.



Christian Calvin mortgage Christian is a contributing writer for Mortgage.info. He is a graduate from the University of Tennessee with a degree in Communications and a concentration in Broadcasting. Christian has served as vice-president for a privately-held company for more than 20 years. Additionally, he has also applied his writing and business knowledge to various websites with a focus on business and sports news . . . both of which are passions. Christian enjoys playing golf and spending time with his family and friends.

Contact: christian@mortgage.info

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