Default Rates on First and Second Mortgages Fall to New Lows

The default rate for first mortgages now stands at a post-recession low, and the default rate for second mortgages is at the lowest level in its more than 8-year history, according to data through September from the ""S&P Dow Jones Indices"":http://www.spdji.com/ and ""Experian"":http://www.experianplc.com/ for the ""S&P/Experian Consumer Credit Default Indices"":http://www.standardandpoors.com/indices/sp-experian-consumer-credit-default-indices/en/us/?indexId=sp-experian-consumer-credit-default-indices.

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The first mortgage default rate fell to 1.36 percent in September, the lowest level since the end of the 2007/2009 recession. The rate dropped from 1.40 percent in August and 1.99 percent in September 2011.

At the same time, the second mortgage default rate bottomed to 0.64 percent, down from 0.72 percent in August 2012 and 1.32 percent a year ago.

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S&P/Experian indices also assessed the delinquency rate for other consumer loans, and found the bank card default rate declined in September to 3.70 percent while the auto loan default rate moved up to 1.11 percent.

""Bank card, first and second mortgage and composite default rates hit new post-recession lows. The first mortgage default rate has been down or flat for nine consecutive months, another positive housing market statistic,"" said David M. Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices, in a release.

In New York, Chicago, Dallas, Los Angeles, and Miami, which are the five cities covered by the S&P/Experian indices, credit default rates were down. Three cities reached post-recession lows in September: Chicago (1.82 percent), New York (1.28 percent), and Los Angeles (1.45 percent).

Blitzer noted that Miami, with a rate of 2.48, may not have reached a new low, but its rate is still ""an incredibly good number when you compare it to the 18.89% rate witnessed in May 2009.""

""There is no doubt that from a borrowing perspective the consumer is in a much better place than two or three years ago,"" added Blitzer. ""We have seen broad-based declining trends in default rates through all of 2012, and all markets and loan types are at or near pre-recession lows.""