By Steve Cook
Default rates on first and second mortgages sank lower than they have been since 2007 and 2006 as more and more homeowners are meeting their mortgage obligations on time.According to May data from S&P/Experian, default rates on first mortgages decreased to 2.09 percent from 2.16 percent in April and defaults on second mortgages fell to 1.42 percent from 1.51 percent in April.Mortgage default rates improved to the best levels in four years even as bank card defaults experienced a slight increase from 5.91 percent to 5.9 percent. All of S&P/Experian’s defaults rates have improved steadily since the first of the year.
“While we might observe volatility from month-to-month, looking at default rates over the past few years it is easy to see that consumers have come a long way in fixing their balance sheets,” said David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “All indices show default rates below where they were this time last year and more so if you look back to 2008/2009.”
In fact, the indexes’ default rate for first mortgages fell to a level lower than it has been since September, 2007. The May rate for second mortgages, 1.42 percent, matched the rate for March, which was lower than it has been since July, 2006.