First and second mortgage default rates fall again in February 2012

On March 20th, S&P Indices and Experian released February data for the S&P/Experian Consumer Credit Default Indices, which measure consumer credit default rates. The data showed a decline in the composite index, led by a six basis point drop in first mortgage default rates. Second mortgage and bank card default rates fell by even more during the month, with both hitting their lowest rate in the three-year history of these data.

As seen in the graph below, the weight of first mortgage default rates leads the trend in the national. First mortgage default rates rose in each of September through December 2011, and fell in January and February 2012, which was the same pattern for the composite.

S&P/Experian Credit Default Indices. Sources: S&P Indices and Experian

In February, first mortgage default rates fell to 2.02%, bringing them close to the recent lows posted back in August 2011. First mortgage default rates started to increase at the start of the housing crisis in the middle of 2006, reached their maximum rate of 5.67% in May 2009, and have since been in a general pattern of decline, hitting that 1.92% low in August. Second mortgages followed the same general trend, with a 4.66% high in March 2009 and February 2012’s new low of 1.20%. So far, 2012 has been positive for consumers holding mortgages.

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