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1st Mortgage Delinquency Up As 2nd Mtg Rate Down

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Although there was month-over-month improvement in second-mortgage loan performance, serious delinquency on first mortgages saw deterioration.

Delinquency of at least 90 days on consumer credit — including
auto loans, bank cards and first and second mortgages — was 0.83 percent as of July 31.

Serious delinquency worsened by a single basis point versus a month earlier. But 90-day delinquency improved by 9 BPS compared to one year earlier.

The performance details were included in the S&P/Experian Consumer Credit Default Indices.

David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said in the report that delinquency is likely to hold through next year.

“This being an election year, and one when there will definitely be a new president next January, the economy faces more than the usual uncertainties,” Blitzer explained in the report. “With the electoral outcome unknown and large differences between the candidates’ policy proposals, one should expect these uncertainties to cause some delays in business investments or consumer spending on big ticket items. Delays in spending are likely to limit the growth in consumer and corporate debt, avoiding substantial increases in default rates in the near term.”

Among the five-largest metropolitan statistical areas, Miami was the only MSA to see month-over-month deterioration: 6 BPS to 1.37 percent.

The Chicago MSA had a 12-basis-point decline from June to 0.89 percent — the best improvement.

The report indicated that 90-day delinquency on just U.S. first mortgages finished last month at 0.66 percent.

Serious delinquency on first mortgages rose by a single basis point from the end of June but fell 14 BPS from July 31, 2015.

On second mortgages,
the 90-day rate was 0.44 percent as of the most-recent date.

But unlike first-mortgage performance, serious delinquency fell 4 BPS from June 2016 and was 11 BPS better than July 2015.

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