Average default rates dip in January on stronger mortgage performance

National consumer credit default rates declined in January, stemming four consecutive months of higher default rates and offering further evidence that the U.S. economy is positioned for a stronger year. According to the latest S&P/Experian Consumer Credit Default Indices, the national composite default rate dropped to 2.16 percent last month, down from 2.24 percent in December. The drop was driven largely by average declines in first mortgage defaults, which fell from 2.19 percent in December to 2.08 percent in January. "As we begin the New Year consumer default rates may be resuming the two-year downward trend that was interrupted in the middle of last year," said David Blitzer, a managing director and chairman at S&P. "Last month we reported that the second half of 2011 saw a modest increase in consumer defaults led by four consecutive monthly increases in first mortgage default. " The report bodes well for the housing sector, which has only recently shown initial signs of recovery. Recent surges in home builder confidence suggest the downturn has passed its nadir, and that home buyers can expect soft credit decisions and standards in coming months.