The default rate on first mortgages was up and down for all of 2015, ending the year with three consecutive months of slight increases, according to the S&P Dow Jones Indices and S&P/Experian Consumer Credit Default Indices [1].
Which direction will the mortgage default index head to start the new year? The industry will find out on Tuesday, February 16, when S&P/Experian releases the consumer credit default report for January 2016.
The first mortgage default rate was 0.84 percent in December [2], an increase of two basis points from November. The rate ticked up by one basis point in November and by five basis points in October. Even after the three straight months of increases, the first mortgage default rate was still down by 18 basis points over-the-year in December 2015.
Three months of increases late in the year do not make a trend, according to David M. Blitzer, Managing Director & Chairman of the Index Committee at S&P Dow Jones Indices.
“The first mortgage move was not unusual given past patterns,” Blitzer said. “There were no seasonal patterns or other concerns that stand out.”
In January 2015, the first mortgage default rate held steady from December to January at 1.02 percent following a jump of five basis points in December, its largest increase in the previous 15 months.
The second mortgage default rate was up by eight points year-over-year in December, however, at 0.67 percent. Though it held steady from November to December, it spiked by 20 basis points in the previous two months.
The composite index, which is comprised of the first and second mortgage default rates, the bank card default rate, and the auto loan default rate, stayed flat at 0.97 percent from November to December. On the remaining two indices that make up the composite rate, the default rate on auto loans was unchanged over-the-month in December at 1.04 percent while the bank card default rate plummeted by 42 basis points down to 2.49 percent.