Earlier today, S&P Indices and Experian released June data for the S&P/Experian Consumer Credit Default Indices, which measure changes in consumer credit defaults (see Dave Guarino’s post below). The indices showed first and second mortgages default rates decreased in June to 2.02% and 1.40%, respectively, from May rates of 2.09% and 1.42%.
By and large, June’s data support the downward trend we have observed over the past two years. In spite of high unemployment rates, consumers appear to be in better financial positions to pay-off their debt, resulting in far lower default rates than we were seeing during the recession. Within the recent housing crisis, first mortgage default rates peaked in May 2009 at 5.67%; second mortgage default rates had peaked two months earlier at 4.66%. While still above their 2004-2006 rates, mortgage default rates are well below their crisis highs, a good sign for the housing market.