WASHINGTON (9/16/15)--First and second lien mortgage defaults rose in August, according to the S&P/Experian Consumer Credit Default Indices, released this week.
First lien defaults increased to 0.84% from 0.8% during the month, and second lien defaults edged higher to 0.57% from 0.55% (Housingwire.com Sept. 15).
Still, analysts believe mortgage defaults remain at a healthy level.
“The ongoing improvement in the consumer economy is reflected in consumer credit default rates,” said David Blitzer, managing director/chair of the S&P Dow Jones Indices index committee (Housingwire.com). “In recent months, we have seen substantial job growth, increases in consumer spending and a rise in consumer credit outstanding.”
Experian also tracked the composite default rate--which includes auto loans, bank cards, and first and second mortgage liens--for the five largest U.S. cities. Four of the five saw default rates increase in August.
New York experienced the largest jump, with a 12-basis-point increase to 1.04% from July; Dallas saw defaults climb by 7 basis points to 0.71%; and Chicago reported a 6-basis-point jump to 1.21%, its third straight increase.
Los Angeles defaults fell by 13 basis points to 0.76%.
Regarding the Federal Reserve policy meeting today and Thursday, “analysts are debating the possible impact of an interest rate increase,” Blitzer said. “A quarter-point increase in the Fed funds rate will not affect fixed-rate mortgage loans or auto financing.
“Some small increases in interest rates on bank cards and similar lending may occur in the months following Fed action. (And) adjustable rate mortgages tied to market rates will rise as mortgage loans reach dates when rates reset.”