Index Shows Mortgage Defaults Down 45% from 2009

Data through June 2010, released Tuesday by Standard & Poor’s and Experian points to a declining trend in consumer default rates, with a reduction in first mortgage past dues leading the drop.

First and second mortgage default rates were 3.3 percent and 2.4 percent, respectively, as of the end of last month, according to the S&P/Experian index.

Default rates on first mortgages fell 5 percent from the previous month and have dropped 45.2 percent from a year ago, S&P says.

Second mortgage default rates are down 0.03 percent compared to May and 44.54 percent compared to June 2009.

The companies reported slight declines in default balances for bank card and auto loans as well, signaling that consumers are getting a better handle on their full financial picture and overall debt.

“The consumer credit picture shows encouraging progress as default rates continue to fall across major categories,” said David M. Blitzer, managing director and chairman of the index committee at Standard & Poor’s.

Blitzer added, “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.”

The S&P/Experian consumer credit default indices are calculated based on data extracted from Experian’s consumer credit database, which is populated with individual consumer loan and payment data submitted by lenders to Experian every month. Experian’s data repository covers approximately $11 trillion in outstanding loans sourced from 11,500 banks and mortgage companies.

Renee West
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Renee West

Broker Associate at Villa Real Estate
I'm a real estate broker associate in Newport Beach & Corona del Mar, CA, with Villa Real Estate.
Contact me at (714) 914 9060 or rwest@villarealestate.com for all your real estate wants and needs.
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