The probability of default on loans rose to 1.17 percent from 1.12 percent in Q4 2017 according to the Default Risk Index (DRI) from VantageScore Solutions. The default risk also rose year over year by 1.11 percent, the index indicated.
The DRI in the mortgage category hit 100.9, its highest index since Q2 2015, when it reached 121.4.
The DRI permit users to monitor the shifting quarterly risk profiles of loan originations in the mortgage, credit card, auto, and student loan categories. The DRI is derived using credit file data from TransUnion and VantageScore odds charts that match values on the 300-850 VantageScore scale range with their corresponding probability of default (PD) values.
Total mortgage originations dropped in Q1 2018 compared to the previous quarter, according to the latest update to the DRI . Q1 2018 saw a total of $329,167,185,062 in mortgage originations, an 18.15 percent drop from Q4 2017 when it was $402.2 billion. However, this is a 2.03 percent increase Q1 2017’s $322.6 billion.
The data's quarterly comparison indicated a slight increase in risk consumption in the bankcard and mortgage, while the student loan category remained flat and the auto loan category materially increased risk. On a quarterly basis, the auto industry’s DRI had the largest increase (13.53 percent); while in the previous three quarters the industry’s DRI has stayed relatively stagnant.
Other categories of credit, such as auto and student loans, saw similar increases in risk in Q1 2018 over the previous quarter. Auto loan DRI jumped from 85.1 to a DRI of 96.6 from Q4 2017 to Q1 2018, while bankcard DRI moved up from 95.8 to 99 within that same time frame. Student loan risk index went up less dramatically, from a DRI of 87.5 to 87.8. Auto and student loans saw the most severe drops in DRI compared to Q1 2017, with the student loan DRI dropping by 3 percent, and the auto loan DRI dropping by 8.1 percent year over year.
Find the full data charts from VantaegScore here.