Default Rates Rose Before Election: S&P/Experian

The default rates for first and second mortgages rose prior to the presidential election, according to Standard & Poor's and Experian.

The first mortgage default rate rose three basis points to 0.7% in October from the month before, according to the S&P/Experian Consumer Credit Default Indices. Similarly, the default rate for second mortgages ticked up two basis points to 0.58% on a monthly basis.

While elevated from the month before, the mortgage default rates were lower than the rates for bank cards and auto loans, which were 2.76% and 1.08%, respectively, in October.

A year ago, the default rate for first mortgages was higher at 0.81%, while the rate was lower for second mortgages at 0.56%.

While it is still too early to determine the extent to which election-related effects will influence default rates and borrowing, David Blitzer, chairman and managing director at S&P Dow Jones Indices, said an increase in interest rates was probable.

"Interest rates are likely to rise over the next year and may put upward pressure on consumer credit interest rates and lending terms," Blitzer said in a news release Tuesday.

"Most analysts expect the new administration to expand federal spending and cut taxes — two forces likely to push interest rates higher. For consumers, higher interest rates will be seen first in mortgages."