The national default rate on first mortgages as of the end October stood at about 0.81%, an increase of five basis points compared with September, when it was 0.76%, but a decrease of 12 basis points compared with October 2014, when the rate was 1.06%, according to the S&P/Experian Consumer Credit Default Indices.
The default rate on second mortgages was 0.56%, an increase compared with 0.47% in September and an increase compared with 0.47% in October 2014.
The report also measures national default rates on credit cards and auto loans.
Of course, all eyes are on the Federal Reserve to see if and when it might increase short-term interest rates – which, in turn, will push rates on certain loans higher, resulting in increased defaults.
‘Following the last Employment Situation Report on Nov. 6 showing an increase of 271,000 jobs in October, the consensus for when the Fed will raise interest rates has focused on the FOMC meeting on Dec. 15-16,’ says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, in a statement. ‘Most Fed watchers expect the target range for Fed funds to be raised to 25-50 basis points from the current range of zero to 25 basis points. The probability of a Fed move in December is about 70 percent based on trading in Fed fund futures at the CME. This long-expected increase is not expected to dampen consumer spending or lead to any near-term move in consumer credit defaults.’