Industrial and Multi-family Loans Drive Annual CRE Increase

The Mortgage Bankers Association
(MBA) reports that commercial and multifamily loan originations were down 7
percent in the fourth quarter of 2011 compared to the third quarter but were 13
percent higher than originations in the fourth quarter a year earlier.  The year-over year change was driven by
originations for both industrial and multifamily properties which increased 43
percent and 31 percent respectively from Q4 2010.  On the negative side, retail loans were down
8 percent, loans for healthcare properties fell 24 percent, office properties
were down 29 percent and hotel originations decreased 44 percent.

Quarter over quarter results were
mixed.  There was a 153 percent jump in
originations for health care properties; industrial loans were up 51 percent
and multifamily properties increased 29 percent.  Originations for healthcare properties fell 52
percent, office properties were down 39 percent, and retail property loans
decreased 24 percent.

Looking at lending by investor groups,
commercial bank portfolios were up by 122 percent compared to the fourth
quarter of 2010 and Freddie Mac and Fannie Mae (the GSEs) increased lending 17
percent.  Life insurance companies and
conduits for commercial mortgage backed securities (CMBS) decreased lending by
23 percent and 50 percent respectively.

 On a quarter-over-quarter basis only the GSEs
increased their loans, which rose 34 percent to an all time high.  Conduits for CMBS were down 26 percent, life
insurance companies decreased lending by 23 percent, and commercial bank
portfolios declined by 16 percent.  

“MBA’s Commercial/Multifamily
Mortgage Bankers Origination Index hit record levels for life insurance
companies in the second and third quarters of 2011,” said Jamie Woodwell,
MBA’s Vice President of Commercial Real Estate Research. “In the fourth
quarter, multifamily originations for Fannie Mae and Freddie Mac hit a new
all-time high. While the CMBS market continued to be held back by broader
capital markets uncertainty during the past year, others – like the GSEs, life
companies and many bank portfolios – increased their appetite for commercial
and multifamily loans.”

Commercial/Multi-family
Originations by Investor Types

Investor
Type

Origination Volume Index*

% Chg

Q4-Q4

Average Loan Size ($millions)

Q3 2011

Q4 2011

Q3 2011

Q4 2011

Conduits

42

31

-50

30.5

23.9

Commercial
Banks

169

143

122

11.8

7.8

Life
Insurance

282

216

-13

20.5

14.0

GSEs

176

236

17

13.8

14.3

Total

138

129

13

14,9

11.6

*2001 Ave. Quarter = 100

Commercial/Multi-family
Originations by Property Types

Investor
Type

Origination Volume Index*

% Chg

Q4-Q4

Average Loan Size ($millions)

Q3 2011

Q4 2011

Q3 2011

Q4 2011

Multi-family

140

181

31

13.2

13.5

Office

91

56

-29

19.1

11.7

Retail

222

169

-8

20.9

12.3

Industrial

142

214

43

12.4

16.2

Hotel

231

110

-44

39.0

20.1

Health
Care

91

229

-24

7.2

12.4

*2001 Ave. Quarter = 100

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Nearly 100 Metro Areas on Improving Market List

The list of Improving Housing Markets (IHM) maintained by
the National Association of Home Builders (NAHB) took another big jump in
February, rising from 76 in January and more than doubling the 41 reported in
December.  There are now 98 metropolitan
areas
representing 36 states included on the list.

The IHM identifies metropolitan areas that have shown
improvement from their respective troughs on each of three metrics –
employment, housing permits, and home prices – for at least six consecutive
months.  NAHB uses data from the Bureau
of Labor Statistics, the U.S. Census Bureau, and Freddie Mac to measure
improved performance.

The additions to the February Index include some
metropolitan areas that had been particularly weak including Miami, Detroit,
Memphis, Kansas City, Missouri; Portland, Oregon, and Salt Lake City.  NAHB points out that inclusion in the Index
does not indicate strong recovery, merely that some of these troubled areas are
coming off of extreme lows.

Seven metro areas dropped off of the Index in February due
to softening housing prices.  One of
these was Washington, DC, one of the few areas that had continued to show
strong prices and sales through 2011. 

“While many of the markets on the February IMI are far from fully
recovered, the index points out where employment, home prices and housing
production are no longer retreating and have held above their lowest recession
troughs for six months or more,” said NAHB Chief Economist David Crowe.
“This is a sign that a large cross section of the country is starting to
turn the corner as local economic conditions stabilize.”

 MSA  Permits Trough Date Growth From Trough Prices Trough Date Growth From Trough Employment Trough Date Growth From Trough
1 Florence, AL 03/31/09 2.6% 02/28/11 0.6% 07/31/09 3.9%
2 Tuscaloosa, AL 05/31/11 8.8% 02/28/11 3.6% 06/30/09 1.7%
3 Fayetteville, AR 03/31/09 1.2% 02/28/11 1.0% 02/28/10 3.0%
4 Napa, CA 06/30/11 31.2% 02/28/11 0.3% 02/28/11 3.3%
5 Boulder, CO 11/30/09 11.6% 01/31/11 6.2% 01/31/10 2.7%
6 Denver, CO 03/31/09 2.8% 02/28/11 2.1% 01/31/10 1.4%
7 Fort Collins, CO 03/31/09 4.5% 12/31/10 4.6% 12/31/09 3.5%
8 Greeley, CO 11/30/10 8.1% 02/28/11 3.3% 12/31/09 0.1%
9 Bridgeport, CT 03/31/09 1.2% 02/28/11 4.5% 01/31/10 1.4%
10 New Haven, CT 04/30/11 26.0% 02/28/11 0.0% 02/28/10 2.1%
11 Cape Coral, FL 03/31/09 3.1% 02/28/11 8.1% 01/31/11 1.7%
12 Deltona, FL 03/31/11 2.6% 03/31/11 15.1% 01/31/11 3.3%
13 Jacksonville, FL 04/30/09 1.4% 02/28/11 1.5% 02/28/10 2.3%
14 Miami, FL 04/30/09 7.3% 03/31/11 2.6% 03/31/10 1.7%
15 North Port, FL 01/31/09 2.7% 02/28/11 6.2% 06/30/11 1.2%
16 Punta Gorda, FL 01/31/09 1.6% 02/28/11 11.5% 06/30/09 3.5%
17 Tampa, FL 03/31/09 1.7% 03/31/11 3.8% 12/31/09 2.6%
18 Athens, GA 03/31/11 4.2% 01/31/11 2.7% 01/31/10 0.8%
19 Augusta, GA 12/31/08 1.7% 03/31/11 3.0% 05/31/11 0.0%
20 Honolulu, HI 12/31/08 0.4% 01/31/11 3.4% 08/31/10 3.1%
21 Ames, IA 07/31/10 7.4% 02/28/11 6.3% 05/31/11 2.4%
22 Davenport, IA 05/31/09 1.8% 12/31/10 4.1% 01/31/10 0.7%
23 Des Moines, IA 02/28/09 4.5% 01/31/11 2.6% 05/31/11 1.5%
24 Dubuque, IA 12/31/08 5.0% 02/28/11 3.1% 04/30/09 5.8%
25 Waterloo, IA 03/31/09 1.4% 11/30/10 0.9% 07/31/09 4.1%
26 Elkhart, IN 04/30/09 2.2% 02/28/11 1.5% 08/31/09 10.4%
27 Indianapolis, IN 01/31/09 0.4% 02/28/11 3.0% 10/31/09 0.6%
28 Lafayette, IN 01/31/09 15.7% 02/28/11 5.4% 07/31/09 4.0%
29 Muncie, IN 04/30/11 11.1% 02/28/10 3.4% 02/28/11 2.7%
30 Lake Charles, LA 04/30/11 6.2% 02/28/11 0.9% 11/30/10 3.6%
31 Monroe, LA 03/31/09 3.3% 05/31/10 3.6% 03/31/11 1.3%
32 Shreveport, LA 01/31/09 1.9% 03/31/11 5.6% 10/31/09 3.2%
33 Boston, MA 02/28/09 1.1% 03/31/11 0.7% 07/31/09 2.9%
34 Springfield, MA 04/30/11 3.8% 03/31/11 2.5% 08/31/09 2.6%
35 Cumberland, MD 05/31/10 3.1% 01/31/11 6.2% 06/30/11 6.5%
36 Lewiston, ME 06/30/11 16.1% 01/31/11 1.4% 06/30/11 3.8%
37 Ann Arbor, MI 05/31/09 0.1% 12/31/10 4.5% 07/31/09 3.0%
38 Detroit, MI 04/30/09 8.6% 03/31/11 6.8% 06/30/09 2.4%
39 Grand Rapids, MI 04/30/09 2.9% 02/28/11 7.7% 07/31/09 5.0%
40 Lansing, MI 05/31/09 4.4% 02/28/11 10.6% 08/31/09 2.7%
41 Monroe, MI 12/31/09 2.7% 02/28/11 7.6% 10/31/09 2.5%
42 Muskegon, MI 11/30/09 0.2% 01/31/11 6.1% 12/31/10 1.6%
43 Duluth, MN 05/31/11 2.9% 03/31/11 4.6% 09/30/09 0.6%
44 Minneapolis, MN 03/31/09 1.8% 02/28/11 2.5% 09/30/09 1.5%
45 Rochester, MN 03/31/09 0.7% 02/28/11 2.4% 12/31/10 1.5%
46 Columbia, MO 11/30/08 1.7% 02/28/11 1.5% 08/31/09 3.6%
47 Jefferson City, MO 08/31/10 1.0% 03/31/11 3.9% 02/28/10 2.1%
48 Joplin, MO 02/28/11 5.0% 02/28/11 15.4% 08/31/09 1.2%
49 Kansas City, MO 03/31/09 3.2% 02/28/11 5.2% 06/30/11 1.2%
50 Hattiesburg, MS 01/31/11 2.2% 03/31/11 4.1% 04/30/11 3.6%
51 Fayetteville, NC 12/31/08 2.1% 01/31/10 0.3% 10/31/10 3.2%
52 Winston-Salem, NC 03/31/09 1.9% 11/30/10 0.1% 01/31/11 2.4%
53 Bismarck, ND 03/31/09 15.3% 02/28/10 8.8% 12/31/07 8.8%
54 Fargo, ND 04/30/09 4.9% 02/28/11 3.0% 07/31/09 4.2%
55 Grand Forks, ND 04/30/09 3.0% 12/31/10 7.7% 09/30/10 4.2%
56 Lincoln, NE 01/31/09 1.6% 01/31/11 4.2% 07/31/10 3.2%
57 Omaha, NE 07/31/10 4.5% 03/31/11 2.7% 02/28/10 2.6%
58 Manchester, NH 02/28/11 2.1% 02/28/11 0.5% 01/31/10 1.8%
59 Ocean City, NJ 03/31/09 1.0% 03/31/11 6.3% 05/31/11 5.7%
60 Syracuse, NY 03/31/11 2.9% 03/31/11 10.2% 08/31/10 1.5%
61 Cincinnati, OH 01/31/09 0.2% 02/28/11 2.1% 12/31/10 1.6%
62 Springfield, OH 01/31/11 13.4% 03/31/11 2.5% 01/31/10 3.5%
63 Toledo, OH 05/31/09 1.4% 01/31/11 0.6% 06/30/09 3.4%
64 Youngstown, OH 06/30/11 5.2% 02/28/11 3.9% 06/30/09 4.0%
65 Oklahoma City, OK 05/31/09 0.6% 02/28/11 1.0% 01/31/10 4.0%
66 Tulsa, OK 10/31/10 0.8% 02/28/11 4.4% 02/28/10 3.1%
67 Corvallis, OR 04/30/11 5.7% 02/28/11 4.3% 07/31/09 4.9%
68 Portland, OR 03/31/09 2.6% 03/31/11 3.7% 11/30/09 2.0%
69 Erie, PA 03/31/11 4.6% 02/28/11 3.1% 02/28/10 3.9%
70 Philadelphia, PA 03/31/09 0.7% 02/28/11 2.9% 02/28/10 0.5%
71 Pittsburgh, PA 02/28/09 1.6% 01/31/10 6.5% 02/28/10 4.1%
72 Williamsport, PA 03/31/11 46.3% 02/28/10 8.5% 12/31/09 3.9%
73 Chattanooga, TN 05/31/11 2.6% 02/28/11 4.0% 08/31/09 3.2%
74 Clarksville, TN 01/31/09 2.7% 02/28/11 1.3% 08/31/09 5.1%
75 Kingsport, TN 02/28/11 0.4% 01/31/11 1.6% 02/28/10 2.8%
76 Memphis, TN 04/30/09 2.8% 03/31/11 1.1% 09/30/10 3.1%
77 Nashville, TN 03/31/09 1.6% 02/28/11 1.4% 09/30/09 3.7%
78 Amarillo, TX 10/31/08 1.7% 01/31/10 3.2% 04/30/10 4.6%
79 College Station, TX 10/31/10 5.5% 02/28/11 10.2% 12/31/07 3.6%
80 Corpus Christi, TX 01/31/11 5.1% 12/31/10 4.3% 11/30/09 6.0%
81 Dallas, TX 05/31/09 0.9% 02/28/11 0.5% 12/31/09 3.6%
82 Laredo, TX 12/31/08 1.3% 01/31/10 2.9% 09/30/09 7.1%
83 Longview, TX 04/30/09 3.2% 03/31/11 5.9% 10/31/09 7.9%
84 McAllen, TX 01/31/09 0.4% 11/30/10 1.9% 12/31/07 5.2%
85 Midland, TX 04/30/09 3.6% 01/31/10 8.7% 08/31/09 10.0%
86 Odessa, TX 02/28/09 24.5% 11/30/10 8.9% 08/31/09 9.0%
87 Tyler, TX 03/31/09 0.4% 12/31/10 0.8% 07/31/10 5.3%
88 Victoria, TX 09/30/10 4.2% 02/28/11 6.2% 11/30/09 4.8%
89 Provo, UT 02/28/09 2.7% 03/31/11 1.1% 12/31/09 4.6%
90 Salt Lake City, UT 03/31/09 2.3% 03/31/11 0.4% 02/28/10 3.6%
91 Danville, VA 03/31/09 1.8% 11/30/10 11.4% 11/30/09 2.9%
92 Winchester, VA 04/30/11 7.9% 10/31/10 8.4% 08/31/09 5.4%
93 Burlington, VT 03/31/11 6.1% 01/31/10 1.3% 09/30/09 4.5%
94 Bellingham, WA 04/30/11 2.7% 03/31/11 0.2% 06/30/11 0.4%
95 Kennewick, WA 03/31/09 4.2% 03/31/11 0.3% 12/31/07 4.4%
96 Madison, WI 01/31/09 1.3% 02/28/11 0.8% 08/31/09 2.1%
97 Casper, WY 11/30/10 7.0% 01/31/10 3.2% 12/31/09 8.5%
98 Cheyenne, WY 12/31/08 6.0% 12/31/10 3.0% 01/31/10 2.8%

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Geithner Outlines Accomplishments, Future of Financial Reform

Treasury Secretary Timothy Geithner told
the Financial Stability Oversight Council that the financial system is getting
stronger and safer and that much of the excess risk-taking and careless
financial practices that caused so much damage has been forced out.  However, he said, “These gains will erode
over time if we are not able to put our full reforms into place.”

He outlined the basic framework has been
laid, with new global agreements to limit leverage, rules for managing the
failure of a large firm and the new Consumer Financial Protection Bureau (CFPB)
up and running, and the majority of the new safeguards for derivatives markets proposed.  Geithner ticked off the major accomplishments
of reform.

First, banks now face much
tougher limits on risk which are critical to reducing the risk of large
financial failures and limiting the damage such failures can cause.  The focus in 2012 will be “on defining the
new liquidity standards and on making sure that capital risk-weights are
applied consistently.”

 The new rules are tougher on
the largest banks that pose the greatest risk and are being complemented by
other limits on risk-taking such as the Volcker Rules and limits on the size of
firms and concentration of the financial systems.  These will not apply only to banks but to
other large financial institutions that could pose a threat to financial system
stability and this year the Risk Council will make the first of these
designations.

Second, the derivatives market will,
for the first time, be required to meet a comprehensive set of transparency
requirements, margin rules and other safeguards.  These reforms are designed to move
standardized contracts to clearing houses and trading platforms and will be
complemented with more conservative safeguards for the more complex and
specialized products less amenable to central clearing and electronic
trading.  These reforms, the balance of
which will be outlined this year, will lower costs for those who use the
products, allow parties to hedge against risk, but limit the potential for
abuse, the Secretary said. 

Third, is a carefully designed set
of safeguards against risk outside the banking system and enhanced protections
for the basic infrastructure of the financial markets: 

  • Money market funds will have new
    requirements designed to limit “runs.”
  • Important funding markets like the
    tri-party repo market are now more conservatively structured.
  • International trade repositories are
    being developed for derivatives, including credit default swaps.
  • Designated financial market utilities
    will have oversight and requirements for stronger financial reserves;

Fourth; there will be a stronger set
of protections in place against “too big to fail” institutions.  The key elements are:

  • Capital and liquidity rules with
    tough limits on leverage to both reduce the probability of failure and prevent
    a domino effect;
  • New protections for derivatives,
    funding markets, and for the market infrastructure to limit contagion across
    the financial system;
  • Tougher limits on institutional size;
  • A bankruptcy-type framework to
    manage the failure of large financial firms.
    This “resolution authority” will prohibit bailouts for private
    investors, protect taxpayers, and force the financial system to bear the costs
    of future crisis.

Fifth, significantly stronger
protections for investors and consumers are being put in place including the
CFPB which is working to improve disclosures for mortgages and credit cards and
developing new standards for qualified mortgages.  New authorities are being used to strengthen protections
for investors and to give shareholders greater voice on issues like executive
compensation.

Geithner pointed to the failure of
account segregation rules to protect customers in the MF Global disaster as proof
of the need for more protections and said that the Council will work with the
SEC and the Commodity Futures Trading Council on this problem.   

Moving forward, reforms must be
structured to endure as the market evolves and to work not just in isolation
but to interact appropriately with each other and the broader economy.  “We
want to be careful to get the balance right-building a more stable financial
system, with better protections for consumers and investors, that allows for
financial innovation in support of economic growth.” 

First, he said, we have to make sure
we have a level playing field at home; that financial firms engaged in similar
activity and financial instruments that have similar characteristics are
treated roughly the same because small differences can have powerful effects in
shifting risk to where the rules are softer. 
A level field globally is also important, particularly with reforms that
toughen rules on capital, margin, liquidity, and leverage, as well as in the
global derivatives markets.  “In these areas we are working to discourage
other nations from applying softer rules to their institutions and to try to
attract financial activity away from the U.S. market and U.S. institutions.” 

It is necessary to align the
developing derivatives regimes around the world; preventing attempts to soften
application of capital rules, limiting the discretion available to supervisors
in enforcing rules on risk-weights for capital and designing rules for
resolution of large global institutions.  Also, because some U.S. reforms are different
or tougher from rules in other markets, there needs to be a sensible way to
apply those rules to the foreign operations of U.S. firms and the U.S.
operation of foreign firms.

 The U.S. also needs to move
forward with reforms to the mortgage market including a path to winding down
the government sponsored enterprises (GSEs.) 
The Administration has already outlined a broad strategy, Geithner said,
and expects to lay out more detail in the spring.  The immediate concern is to repair the damage
to homeowners, the housing market, and neighborhoods.  The President spoke this week about the range
of tools he plans to use.  Our ultimate goals
are to wind down the GSEs, bring private capital back into the market, reduce
the government’s direct role, and better target support toward first-time
homebuyers and low- and moderate-income Americans.

Geithner said the new system must
foster affordable rentals options, have stronger, clearer consumer protections,
and create a level playing field for all institutions participating in the
system.  For this to happen without
hurting the broader economy and adding further damage to those areas that have
been hardest hit, banks and private investors must come back into the market on
a larger scale and they want more clarity on the rules that will apply. 

Credit availability is still a problem
and there is a broad array of programs in place to improve access to credit and
capital for small businesses.  As
conditions improve, it is important that we remain focused on making sure that
small businesses, a crucial engine of job growth, have continued access to
equity capital and credit.

Many Americans trying to buy a home
or refinance their mortgage are also finding it hard to access credit, even for
FHA- or GSE-backed mortgages.  The Administration has been working closely
with the FHA and FHFA to encourage them to take additional measures to remove
unnecessary barriers and they are making progress.  They will probably outline additional reforms
in the coming weeks.

Bank supervisors, in the normal
conduct of bank exams and supervision, as well as in the design of new rules to
limit risk taking and abuse, must be careful not to overdo it with actions that
cause undue damage to the availability of credit or liquidity to markets.

Geithner said the U.S. financial
system is getting stronger
, and is now significantly stronger than it was
before the crisis.  Among the achievements:

  • Banks have increased common equity
    by more than $350 billion since 2009.
  • Banks and other financial
    institutions with more than $5 trillion in assets at the end of 2007 have been
    shut down, acquired, or restructured.
  • The asset-backed commercial paper
    market has shrunk by 70 percent since its peak in 2007, and the tri-party repo
    market and prime money market funds have shrunk by 40 percent and 33 percent
    respectively since their 2008 peaks.
  • The financial assistance we provided
    to banks through TARP, for example, will result in taxpayer gains of
    approximately $20 billion.

The Secretary said the strength of
the banks is helping to support broader economic growth, including the more
than 3 million private sector jobs created over 22 straight months, and the 30
percent increase in private investment in equipment and software.  
Broadly, the cost of credit has fallen significantly since late 2008 and early
2009.  Banks are lending more, with commercial and industrial loans to
businesses up by an annual rate of more than 10 percent over the past six
months.  

He concluded by saying that no
financial system is invulnerable to crisis, and there is a lot of unfinished
business on the path of reform.  The reforms are tough where they need to
be tough.  “But they will leave our financial system safer, better able to
help businesses raise capital, and better able to help families finance safely
the purchase of a house or a car, to borrow to invest in a college education,
or to save for retirement.  And they will protect the taxpayer from having
to pay the price of future crisis.”

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Builder Confidence Index At 54 Month High

Home builder confidence rose in January
for the fourth consecutive month as builders saw more buyer traffic and
anticipated higher sales.  The National
Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) rose
four points to 25
in January to reach its highest level since June 2007.  Each of the three components of the HMI also
increased for the fourth month and the improved confidence was evident across
every region of the country.

The HMI is the result of a monthly
survey of NAHB has conducted for 20 years. 
The survey asks the Association’s home builder members their perceptions
of current single-family home sales and their expectations for such sales over
the next six months, each graded on a scale of “good,” “fair,” or “poor.”  The survey also asks builders to rate the
current traffic of prospective buyers as “high to very high,” “average,” or “low
to very low.”  Answers to each question
are used to calculate a component index and those comprise the composite
index.  For each index a number over 50
indicates more builders view conditions as good than as poor.

Each of the three component indices rose
three points in January.  The component
measuring current sales conditions is at 25 and the index measuring traffic of
prospective buyers is at 21, the highest point for each since June 2007; the
index reflecting expectations for the next six months rose to 29, the highest score
September 2009.

Bob Nielsen, NAHB chairman said of the
results, “This good news comes on the heels of several months of gains in
single-family housing starts and sales, and is yet another indication of the
gradual but steady improvement that is beginning to take hold in an increasing
number of housing markets nationwide. Policymakers must now take every
precaution to avoid derailing this nascent recovery.”

“Builders are seeing greater interest among potential buyers as employment
and consumer confidence slowly improve in a growing number of markets, and this
has helped to move the confidence gauge up from near-historic lows in the first
half of 2011,” noted NAHB Chief Economist David Crowe. “That said,
caution remains the word of the day as many builders continue to voice concerns
about potential clients being unable to qualify for an affordable mortgage,
appraisals coming through below construction cost, and the continuing flow of
foreclosed properties hitting the market.”

The HMI also posted gains in all four regions in January, including a
nine-point gain to 23 in the Northeast, a one-point gain to 24 in the Midwest,
a two-point gain to 27 in the South and a five-point gain to 21 in the West.

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Credit Defaults Increase, Led by Mortgage Markets

Bank cards were the only type of
consumer debt to see a decline in defaults during December according to data
released today by S&P Indices and Experian. 
The S&P Experian Consumer Credit Default Indices showed increased
defaults in both first and second mortgages and in auto loans.  Driven primarily by the increase in mortgage
defaults, the national composite index rose from 2.22 percent in November to
2.24 percent in December, the highest rate since April of 2011.  In December 2010 the Index stood at 3.01
percent.

The default rate for second mortgages increased
from 1.26 percent to 1.33 percent, auto loan defaults rose to 1.27 percent from
1.17 percent and first mortgage defaults increased to 2.19 percent from 2.17
percent.  The default rate for bank cards
however dropped from 4.91 percent to 4.60 percent.  All rates have improved from those of one
year earlier when the default rate for second mortgages was 1.74 percent; first
mortgages, 2.93 percent; auto loans, 1.69 percent; and bank cards, 6.73
percent.

“Led by the
mortgage markets, the second half of 2011 saw a slight reversal of the two-year
downward trend in consumer credit default rates,” says David M. Blitzer,
Managing Director and Chairman of the Index Committee for S&P Indices.
“First mortgage default rates rose for the fourth consecutive month, as did the
composite. Since August, first mortgage default rates have risen from 1.92% to
the 2.19%. The composite also rose those months, from 2.04% to 2.24%.  The
recent weakness seen in home prices is reflected in these data.  Bank card
default rates, on the other hand, were favorable, falling to 4.6% in December.
This is more than a full percentage point below the 5.64% we saw as recently as
July 2011.

S&P Experian data highlighted
five Metropolitan Statistical Areas (MSAs). 
Three of the five showed increases in default rates for the month: Miami
increased from 4.47 percent to 4.73 percent; Dallas from 1.38 percent to 1.56
percent, and Los Angeles to 2.54 percent from 2.53 percent.  Chicago was unchanged at 2.84 percent and New
York decreased from 2.21 percent n November to 2.13 percent in December. 

Blitzer said
of the MSA data, “Given what we know about the mortgage markets, it is likely
that these cities are seeing this recent weakness because their housing markets
have still not stabilized.”


 

…(read more)

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