If you're only concerned with files under a home folder, run chmod o-rwx on the relevant directory; taking permission away on the folder blocks access.
The defaults come from /etc/useradd.conf, which is well documented in the comments. The specific value you'll need to change is DIR_MODE.
The default permissions for new files and directories during a shell session are controlled by umask.
This sounds like an odd default, but there may be an assumption by the VPS provider that:
- home directories will normally be used for website files, so must be readable by apache (which normally runs as nobody), and this reduces their support tickets.
- than Linux users will change permissions on directories/files they don't want to share.