Consumer credit default rates for mortgages have remained fairly stable in 2018, according to the latest S&P/Experian Consumer Credit Default Indices. The data indicated that first mortgage default rate decreased by two basis points to 0.63 percent in September, compared with 0.65 percent in August 2018. On a year-over-year basis, the index indicated that first mortgage defaults were down three basis points from 0.66 percent during the same period last year.
The S&P/Experian Consumer Credit Default Indices represent a comprehensive measure of changes in consumer credit defaults. The composite rate of all consumer credit defaults (auto, credit card, and mortgage) was down five basis points compared to August 2018 at 0.82 percent. The largest month-over-month drop in defaults was seen in bank card defaults, which fell 38 basis points to 3.14 percent.
The five major metropolitan areas covered by these indices—Dallas, Los Angeles, Chicago, New York, and Miami—recorded a decrease in composite default rates, with Dallas registering the largest drop falling 11 basis points to 0.73 percent in September. The default rate in Miami saw the smallest drop falling just one basis point to 1.56 percent.
"Consumer credit default rates for mortgages and auto loans are stable, while default rates for bank cards declined modestly in the last few months," said David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. "With the low unemployment rate and some improvement on wage gains, consumers are not facing rising economic pressure."
Attributing the current "good consumer credit default pattern" to favorable incomes and slowing auto and home sales, Blitzer said that soft retail sales growth had contributed to improvements in the bank card default picture.
Looking ahead, Blitzer said that the current hurricane season would have a short-term impact in retail sales in the impacted areas. "However, this is likely to be followed by rising retail sales and spending combined with weaker consumer financial conditions for consumers in affected regions. Depending on the extent and severity of the storm damage, consumer credit default rates in some regions could rise during the rest of 2018," he said.