The mortgage default rate rose by just two basis points in August 2018, remaining relatively stable. According to the S&P/Experian Consumer Credit Default Indices, the first mortgage default rate was 0.65 percent, up from 0.63 percent in July 2018, and the same level as August 2017. David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices, commented on the economic factors keeping default rates, including mortgage and bank card defaults, relatively stable.
“Recent economic reports point to continued stability in consumer credit default rates,” said Blitzer. “A review of economic statistics covering the consumer economy is favorable. Job creation continues at about 200,000 per month with the unemployment rate at just below 4 percent and wage gains are approaching a 3 percent annual rate. While jobs and incomes advance, the spending side is showing modest retail sales growth and auto and home sales are flat to down. These trends favor stable default rates in the near term.”
CoreLogic also found stable delinquency rates in its most recent Loan Performance Insights Report. Like Blitzer, Dr. Frank Nothaft, Chief Economist for CoreLogic, notes that the improved job market may have contributed to the lower delinquency and foreclosure rates.
“A solid labor market enables more homeowners to remain current on their mortgage,” said Dr. Nothaft. “The national unemployment rate in June 2018 was 4 percent, the lowest for June in 18 years. While this has helped reduce delinquencies nationally, delinquency rates in areas hit by wildfires, hurricanes or other natural disasters have jumped as families deal with financial disruption and tragedy. The loss of housing and the displacement of families also tends to drive up local rents and reduce vacancies.”
According to the report, 4.3 percent of home mortgages were in some stage of delinquency in June 2018, compared to 4.6 percent a year before and 4.2 percent in June 2006. CoreLogic’s overall delinquency rate includes all home loans 30 days or more past due, including those in foreclosure.