Mortgage default rates are seeing a slight uptick despite recent improvements in housing starts, but this news should not be a major cause of concern, according to data released last week by S&P Dow Jones Indices LLC and Experian.

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Takeaways:

  • The S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed increases in first-mortgage and second-mortgage default rates in June.
  • The first-mortgage default rate of 0.8 percent in June was up six basis points from its historical low in May.
  • The indices noted that three major cities continued their downward trend and reported negative month-over-month default rates in June: Los Angeles, New York and Dallas.

Mortgage default rates are seeing a slight uptick despite recent improvements in housing starts, but this news should not be a major cause of concern, according to data released last week by S&P Dow Jones Indices LLC and Experian.

The S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed increases in first-mortgage and second-mortgage default rates in June.

The first-mortgage default rate of 0.80 percent in June was up six basis points from its historical low in May, while the second-mortgage default rate reported an increase of 13 basis points to 0.55 percent.

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But none of these data are immediate cause for concern, as they reflect continued consumer optimism and spending, said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

In fact, the indices noted that three major cities continued their downward trend and reported negative month-over-month default rates in June: Los Angeles, New York and Dallas.

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“The economy continues to expand at a modest pace, helped by the 5.3 percent unemployment rate, a continued low rate of initial unemployment claims and recent improvements in housing starts,” Blitzer said. “We would need higher inflation for a long time period before it would worry consumers or cause a pause in spending or credit usage.”

The S&P/Experian Consumer Credit Default Indices are published on the third Tuesday of each month and track the default experience of consumer balances in first- and second-mortgage liens, as well as in auto loans and bank cards.

Email Amy Swinderman.

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