Mortgage default rates fell below one percent for the first time in years, providing further evidence that the foreclosure era is all but over.
Data through June 2014, released today by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed decline in default rates. After eight consecutive months of rate declines, the first mortgage default rate fell to 0.89.
“Consumer credit default rates continue to drift lower and have reached a historical low,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Dow Jones Indices. “Recent economic reports are encouraging with the unemployment rate now at a six year low and strong job creation in recent months. The continued declines in consumer default rates confirm other indicators of an improving economy. Credit standards for mortgage loans continue to be somewhat restrictive and may be contributing to low first mortgage default rates.
“After reaching a historical low last month, Dallas was the only city to see its default rate increase; it posted 0.87% in June 2014. Chicago, Los Angeles, Miami and New York are at their lowest default rates since the start of the last recession. Miami continues to maintain the highest default rate of 1.68% while Los Angeles is now posting the lowest default rate of 0.75%. All five cities – Chicago, Dallas, Los Angeles, Miami and New York – remain below default rates seen a year ago.”