Mortgage default rates continue to trend down

Default rates hit lowest level since May 2006

Mortgage default rates witnessed the biggest decline in May when compared to bank cards and auto loans, with the first mortgage default rate continuing its downward trend from 1.30% in October 2013 to .92% in May 2014.

However, David Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices, cautioned, “Although historically low default rates are welcome, some home buyers may have difficulty qualifying for mortgages. Last year saw a surge in home prices but we are seeing signs of slowing gains this year. One question is whether banks are willing to make mortgage loans as home prices rise faster than incomes.”

According to the S&P/Experian Consumer Credit Default Indices, Consumer credit decreased to the lowest default rate since May 2006, falling to 1.01 from 1.11 in April and 1.42 in May 2013.

“Consumer credit default rates decreased for their seventh consecutive month,” Blitzer said. “The national composite is now only one basis point above its historic low.”

At the metropolitan level, New York was the only city to see its default rate increase but it showed the largest drop-off from one year ago, increasing to 1.23 from 1.19 in April, but significantly down from 2.04 in May 2013.  

Meanwhile, Dallas recorded a new historic low of 0.77% while Chicago, Los Angeles and Miami are at their lowest default rates since the start of the last recession, Blitzer explained.

“Miami continues to maintain the highest default rate of 1.74% while Dallas maintains the lowest rate of 0.77%,” Blitzer said. “All five cities – Chicago, Dallas, Los Angeles, Miami and New York – remain below default rates seen a year ago.” 

Most Popular Articles

3d rendering of a row of luxury townhouses along a street

Log In

Forgot Password?

Don't have an account? Please