Default Rate

The default rate refers to the percentage of borrowers who fail to repay their loans as agreed. It is an important metric for lenders and investors, indicating the level of risk associated with lending. A high default rate suggests that a significant number of borrowers are unable to meet their payment obligations, which can lead to financial losses for lenders. Understanding the default rate helps assess the health of financial markets and the creditworthiness of borrowers, influencing interest rates and lending practices in the economy.