Fewer borrowers defaulted on their first mortgage than for the eighth straight month, according to consumer credit data from Standard & Poor’s and Experian, keeping the trend alive for all of 2012.
First mortgages defaulted at a 1.4% rate in August, down from 1.92% one year ago.
The default rate on second mortgages dipped to 0.72% in August, down three basis points from the previous month and well below the 1.27% rate last year.
Fewer consumers have been falling behind on a variety of payments this year. David Blitzer, managing director and chairman of the index committee at S&P, said the trend is beginning to flatten.
“First and second mortgage and composite default rates hit new post- recession lows,” Blitzer said. “The first mortgage default rate has been down or flat for eight consecutive months, a good sign for the housing market. Second mortgage default rates were down in all but one of those same months.”
Blitzer added there had been some volatility in the numbers, but consumers overall are beginning to correct their own balance sheets.
“For the housing market, there are still a substantial number of loans outstanding that defaulted in the past and that segment of the market is still of concern,” Blitzer said. “But for 2012, the drop in mortgage default rates is a good sign for the housing market and the consumer.”