S&P: Second Mortgage Defaults at Lowest Point in 7 Years

Default rates fell in May for all types
of loans tracked by the S&P/Experian Credit Default Indices. For most loan types it was the fifth
consecutive drop and four loan types posted their lowest rates since the end of
the recession.

The national composite default rate
declined to 1.62 percent in May from 1.86 percent in April and the first
mortgage rate was down to 1.50 percent from 1.76 percent. Second mortgage defaults were at 0.88 percent,
compared to 0.93 percent and bank card defaults dropped to 4.35 percent from
4.49 percent. Auto loans fell four basis
points to 1.03 percent, a low point in the eight year history of the index.

Second mortgage defaults were at their
lowest point in seven years and first mortgage and credit card defaults were
the lowest since May 2007 and 2008 respectively.

“May 2012 data show continued
improvements in consumer credit quality,” says David M. Blitzer, Managing
Director and Chairman of the Index Committee for S&P Indices. “Consumer
default rates continue to fall and we are reaching new lows across all the loan
types. In the last recession, default rates peaked in the spring of 2009, since
then the decline has been bumpy but consistent.  Only bank cards remain
above their pre-recession lows.

S&P/Experian covers five
metropolitan statistical areas (MSAs) and all five saw their default rates fall
to post-recession lows. Chicago declined
for the fifth straight month to 1.85 percent, down nearly a percentage point
since December. Miami and New York recorded
their fourth consecutive decreases with Miami down by 59 basis points and New
York by 17. Dallas hit an index low at
0.94 percent, down from 1.25 percent in April and Los Angeles moved down
slightly from 1.88 percent to 1.82 percent.

The table below summarizes the May
2012 results for the S&P/Experian Credit Default Indices. These data are
not seasonally adjusted and are not subject to revision.


…(read more)

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