Mortgage Defaults Rise for First Time in a Year

December 21, 2010 No Comments »

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Mortgage defaults increased for the first time since December 2009 last month, according to joint data from credit bureau Experian and S&P.

The default rate for first mortgages was 3.05 percent in November, up 4.95 percent from October, but still 34.84 percent lower than a year ago.

More borrowers were behind on payments on second mortgages as well, with the default rate rising 0.65 percent to 1.80 percent in November.

Despite the month-to-month rise, lates on second mortgages were off nearly 50 percent from a year ago, so we seem to be heading toward some kind of recovery.

“Default rates for auto loans and bank cards declined in November while first and second mortgages experienced somewhat higher defaults,” said David M. Blitzer, Managing Director and Chairman of the Index Committee, in a release.

“However, the deterioration in the mortgage sector may be temporary: rates of new defaults have been declining for over a year with occasional brief interruptions.”

The report noted that Los Angeles is beginning to experience stability in housing, while hard-hit Miami and much of Florida continues to face “credit default concerns.”

Experian’s data includes loans sourced from 11,500 leading banks and mortgage lenders, and covers approximately $11 trillion in outstanding loans.

A recent report from credit bureau TransUnion expects the mortgage delinquency rate to fall 20 percent in 2011, after increases of 54 percent, 53 percent, 50 percent, between 2006-2009, respectively.

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