The default rate on first mortgages dropped to 1.93% in July, according to Standard & Poor’s. S&P, in conjunction with the consumer rating firm Experian, monitors the rate of defaults within asset-backed securities. First mortgage defaults declined from 2.02% in June and 3.24% one year ago. Second mortgage defaults showed a steeper drop to a rate of 1.25% in July, down from 1.4% the month before and 2.77% last year. Defaults actually dropped across the entire ABS spectrum covered by the two firms, reaching a composite default rate of 2.06% in July. It’s down more than a full percentage point from one year ago. While defaults were down, delinquencies remained elevated. According to Lender Processing Services, the delinquency rate on mortgages increased 2.4% in July. More than 4.4 million loans are considered 30 days late or worse. Still, the Federal Reserve Bank of Cleveland released a study this week showing overall household debt dropping toward a 20-year low, and Erkan Erturk, a credit analyst at S&P, said the July data shows a similar trend. “The firming of these rates suggests that consumers continue to bolster their financial positions by paying down debt and not incurring excessive charges despite elevated unemployment and economic weakness, which we consider a positive for auto, credit card, and other types of consumer ABS credit,” Erturk said. Write to Jon Prior. Follow him on Twitter @JonAPrior