Despite drops earlier in year, home loan defaults up in November

After showing signs of recovery in September, the latest S&P Dow Jones Indices reveal consumers failed to keep with their mortgage loan payments.

According to the S&P/Experian Consumer Credit Default Indices for November, the national composite index rose for the second consecutive month. In October, the index increased to 1.55 percent from 1.46 in September, and most recently jumped 1.64 percent in November.

In September, first mortgages fell to the lowest level seen since the start of recovery after the recession. However, October and November resulted in a rise in mortgage delinquency. The rate for second mortgages, on the other hand, fell 0.65 percent in October to 0.62 percent, a new record low.

"This increase in national default rates was solely driven by an increase in the first mortgage default rate," said David Blitzer, managing director and chairman of the index committee for S&P Dow Jones Indices. "All other loan types - auto loan, bank card and the second mortgage posted decreases in their default rates in November."

When comparing indices from November last year, the composite was down from 2.22 percent to 1.64. First mortgage defaults fell from 2.17 to 1.58 percent over the 12-month period and second mortgage defaults were also down to 0.62 percent in November from 1.26 recorded the year before. Bank card and auto loans were both down significantly.

Almost every city shows higher default rates
Data indicates that Miami suffered from the highest default rate at 2.66 percent out of the five cities studied. Though, the metro has posted notable gains in every other housing market factor including sales and home prices.

In Los Angeles the rate or defaults grew 16 index points and were up 12 points in New York. Chicago also saw a rise, moving forward 7 points while Dallas posted a slight decline in defaults, slipping one basis point.

Blitzer notes the increase in defaults should be closely monitored, though 2013 is projected to bring positive news for both the national housing market and the overall economy.



blog comments powered by Disqus