Serious Mortgage Delinquency Deteriorates

Ninety-day delinquency on consumer credit was 0.95 percent as of Jan. 31, according to the Composite Consumer Credit Default Index. The rate deteriorated 4 basis points from one month previous.

Serious delinquency has ascended 3 BPS from the same date last year based on the index, a reflection of the performance on car loans, bank cards and first and second mortgages.

The delinquency data was reported Tuesday by S&P Dow Jones Indices LLC and Experian.

“The composite default rate has crept steadily higher over the past several months, largely driven by bank card default rates, which are up 42 basis points since September 2017 and have now reached a nearly four-year high,” the report stated.

Last month’s deterioration was most felt by the Miami metropolitan statistical area, where the Composite Index ascended 29 BPS to 1.27 percent. In addition to experiencing largest month-over-month increase of any of the five MSAs tracked, Miami’s rate was the highest.

The lowest delinquency rate among the five MSAs was in Los Angeles: 0.77 percent.

The report indicated that 90-day U.S. delinquency on first mortgages was 0.72 percent, climbing from December 2017 by 4 BPS.

Serious first-mortgage delinquency has not changed, however, compared to January 2017.

No mention was made in the report about the effect of last year’s hurricanes on rising delinquency. But
David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, did offer some insight about the impact of recently rising interest rates in the report.

“Home mortgage rates, which respond to movements in the financial markets, have risen from 4 percent to about 4.4 percent since the beginning of 2018,” Blitzer said. “Although interest rates have increased, there are few signs of financial tightness or increased difficulties in qualifying for loans.”