If credit card defaults are any indication of future foreclosure activity, the housing market still has a ways to go until it finds a bottom.
According to a Reuters report, credit card defaults reached record highs in April. The following is a comparison of the default rate from March to April of major credit card issuers:
Citigroup: 9.66 / 10.21
Wells Fargo: 9.69 / 10.03
JPMorgan Chase: 7.13 / 8.07
Discover: 7.39 / 8.26
The "exception" to this trend was Capital One which showed virtually no change between March and April because, "it changed its customer bankruptcy accounting, waiting longer to declare the debts of bankrupt customers uncollectable." Scott Valentin an analyst with FBR was quoted as saying, "We expect a 'catch-up' in May, which will likely cause a large spike in the May net charge-off rate."
While there may or may not be a relationship between the actual default rate of credit cards and foreclosures, I don't think it requires to much imagination to connect the dots that if consumers are no longer paying on their credit cards, their mortgage will likely be the next thing to go into default.
If this relationship is true, we can expect to see a sustained increase in foreclosures over the next several months and unfortunately with demand for real estate as weak as it is, this next wave of foreclosures will put additional downward pressure on home values as there won't be enough buyers to absorb the excess supply of homes.
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