S&P/Experian Confirm Declining Trend of Mortgage Default Rates

No Comments » | Posted by Joseph Carr-Boyd
Jul 20 2010

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First Mortgages lead the drop in June

NEW YORK () – Data through June 2010, released today by Standard & Poor’s and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, show that the monthly default rates declined for all five credit lines. Defaulting balances of bank card loans were 8.8% in June, down from 8.9% in May. First and second mortgage default rates were 3.3% and 2.4% respectively, with first mortgage default rates declining 5.0% from last month and 45.2% from a year ago. Auto loan defaults were 1.7% in June, down from 1.8% in May.

“The consumer credit picture shows encouraging progress as default rates continue to fall across major categories and in the highlighted cities. The data are consistent with reports that people continue to eschew debt and as the slow recovery from recession and financial turmoil continues. For the economy this is mixed news – better credit quality, as seen in this report is clearly positive. However, as reported earlier by the Federal Reserve, consumers credit use is declining, dampening the outlook for spending,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at Standard & Poor’s.  

Consumer credit defaults vary across major cities and regions of the U.S. Among the five major Metropolitan Statistical Areas reported each month in this release, New York had the largest decline in defaults in the last month at 12.11% while Dallas showed the smallest decrease of 29.59% in the past year. The sharpest decline was in Miami where defaults have declined 53.55% in the last 12 months.

The table gives summary results for June 2010 for the S&P/Experian Credit Default Indices. These data are not seasonally adjusted and are not subject to revision.

  S&P/Experian Consumer Credit Default Indices

National Indices   Index June Index
Level Change from
May, 2010 Change from
June 2009   Composite 3.44 -4.49% -36.96%   First Mortgage 3.27 -5.05% -41.38%   Second Mortgage 2.41 -0.03% -44.54%   Bank Card 8.81 -0.78% 5.81%   Auto Loans 1.69 -3.61% -22.34%   Source: S&P/Experian Consumer Credit Default Indices

Data Through: June 2010          

The second table provides the S&P/Experian Consumer Default Composite Indices for five selected metropolitan statistical areas:

  Metropolitan Statistical Area June Index
Level Change from
May 2010 Change from
June 2009   New York 3.46 -12.11% -32.97%   Chicago 3.63 -6.98% -33.60%   Dallas 2.45 -4.13% -29.59%   Los Angeles 4.74 -4.31% -40.02%   Miami 8.53 -8.12% -53.55%   Source: S&P/Experian Consumer Credit Default Indices

Data Through: June 2010          

Jointly developed by Standard & Poor’s and Experian, the S&P/Experian Consumer Credit Default Indices are published on the third Tuesday of each month at 9:00 am ET. They are constructed to accurately track the default experience of consumer balances in four key loan categories: auto, bankcard, first mortgage lien and second mortgage lien. The Indices are calculated based on data extracted from Experian’s consumer credit database. This database is populated with individual consumer loan and payment data submitted by lenders to Experian every month. Experian’s base of data contributors includes leading banks and mortgage companies, and covers approximately $11 trillion in outstanding loans sourced from 11,500 lenders.

For more information, please visit: www.consumercreditindices.standardandpoors.com.

About S&P Indices

S&P Indices, the world’s leading index provider, maintains a wide variety of investable and benchmark indices to meet an array of investor needs. Over $1 trillion is directly indexed to Standard & Poor’s family of indices, which includes the S&P 500, the world’s most followed stock market index, the S&P Global 1200, a composite index comprised of seven regional and country headline indices, the S&P Global BMI, an index with approximately 11,000 constituents, and the S&P GSCI, the industry’s most closely watched commodities index.  For more information, please visit www.standardandpoors.com/indices.

About Standard & Poor’s

Standard & Poor’s, a subsidiary of The McGraw-Hill Companies (NYSE: MHP), is the world’s foremost provider of independent credit ratings, indices, risk evaluation, investment research and data. With offices in 23 countries and markets, Standard & Poor’s is an essential part of the world’s financial infrastructure and has played a leading role for 150 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com.

Standard & Poor’s does not sponsor, endorse, sell or promote any S&P index-based investment product. The S&P/Experian Consumer Credit Default Indices are products of S&P Indices, which operates independently of Standard & Poor’s Ratings Group. Standard & Poor’s Ratings Group plays no role in the compilation, distribution or licensing of the Indices.

About Experian Capital Markets

Formed as a response to market needs, Experian Capital Markets leverages Experian’s comprehensive U.S. consumer and business databases to provide data and analytics to serve the transparency needs of the structured finance market participants. By taking underlying borrower data and applying advanced analytics, Experian provides insight into U.S. consumer and business credit behavior across all obligations, helping to forecast future payment patterns on prepayments, delinquencies, charge-offs or defaults for non-agency residential mortgage–backed securities and other asset-backed securities.

About Experian

Experian is the leading global information services company, providing data and analytical tools to clients in more than 65 countries. The company helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score and protect against identity theft.

Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2009, was $3.9 billion. Experian employs approximately 15,000 people in 40 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; Costa Mesa, California; and Sao Paulo, Brazil. 

For more information, visit http://www.experianplc.com.

Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein may be the trademarks of their respective owners.

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Filed under Credit · Tagged with home loan, mortgage, mortgage default rate, mortgage defaults, S&P/Experian Consumer Credit Default Indices

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