The latest S&P/Experian Consumer Credit Default index found the composite rate for default was 1.02% in February—unchanged from the prior month.
The report states the first mortgage default rate in February was unchanged from the previous month at 0.84%. Default rates for bank cards rose 13 basis points to 3.41% and the auto loan default rate dropped to 0.89%.
Four of the five largest metropolitan statistical areas (MSAs) revealed lower default rates compared to January. Miami had the largest monthly decline of 1.66%. New York fell to 1%; Los Angeles dropped to 0.80%, and Dallas fell slightly to 1.02%.
Chicago was the only major MDS that reported an increase—up 1.21% from the prior month.
The default rate for first mortgages, while unchanged from January to February, rose when compared to February 2019. The default in February 2019 was .70% and it came in at .84% in February 2020.
Auction.com reported in January that experts predict foreclosure and REO inflow will increase in 2020, with most of the influx coming for government-insured loans.
The majority of servicers Auction.com surveyed expect foreclosure and REO inflow to increase in five of seven U.S. regions. According to the report, 89% said they expect government-insured foreclosure and REO inflow to increase in 2020, the highest among four product types provided as options in the survey.
The majority of survey respondents said they expect foreclosure and REO inflow to increase in 2020 in five of seven U.S. regions provided as options in the survey. The only two exceptions were the Central and North Central regions. Respondents were split evenly between increased inflow and decreased inflow in both these regions.
“Most in the default servicing industry expect government-insured loans to be the primary source of increased foreclosure inflow in 2020, even in the absence of a widespread recession or housing downturn,” said Jesse Roth, SVP of Strategic Partnerships and Business Development with Auction.com. “That’s a rational conclusion given the rising risk profile of FHA-backed loans originated in the last five years.”