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Delinquency Down on 1st Mortgages, Up on 2nds

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Mortgage Daily

                                                 June 20, 2017

Serious delinquency on first-lien home loans took a nice tumble last month. But the same can’t be said for the past-due rate on second mortgages.

Ninety-day delinquency on consumer credit — including
bank cards, car loans and first and second mortgages — was 0.86 percent as of May.

That is according to the Composite Consumer Credit Default Index, which improved by 4 basis points when compared to one month previous.

But the index, which was reported Tuesday by
S&P Dow Jones Indices and Experian, has worsened 5 BPS versus the same month last year.

In New York, the index was 1.01 percent, tumbling from April 2017 by 9 BPS — the biggest decline of the five-largest metropolitan statistical areas. But in Chicago, the index was 0.97 percent last month, rising 3 BPS — the only MSA to experience deterioration.

The report indicated that the 90-day delinquency rate on first mortgages was 0.64 percent as of May 2017. The rate fell 5 BPS from a month earlier. But a 1-basis-point increase was recorded versus a year earlier.

“The default rate on first mortgage remains at 1 percent, lower than the pre-crisis period,” David  M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, stated in the report. “Rising home prices and increases in the equity mortgage borrowers have in their home are helping lower default rates.”

Blitzer noted that serious delinquency on first mortgages has improved as bank card defaults have deteriorated. He attributed the disparity to interest rates, which are just around 4 percent on home loans and between 12 percent and 18 percent on credit cards.

On second mortgages, serious delinquency was 0.54 percent. The second-mortgage rate climbed 3 BPS from a month prior and a year prior.

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