Press Briefing on Household Debt, with Focus on Student Debt - LEM Capital

Press Briefing on Household Debt, with

Focus on Student Debt

April 3, 2017

Raji Chakrabarti, Andrew Haughwout, Donghoon Lee, Joelle Scally, Wilbert van der Klaauw

The views expressed here are those of the presenters and do not necessarily represent those of the Federal Reserve Bank of New York or the Federal Reserve System.

Roadmap for Today's Presentation

Overview of Household Debt Recent Trends in Student Loan Borrowing, Delinquency

and Repayment Relationship between Homeownership, Student Debt and

Educational Attainment

2

Overview of Household Debt

for internal use only

Total Household Debt Expected to Pass 2008Q3 Peak this Year but Composition Has Changed

Trillions of Dollars 15

Mortgage 12

9

Total Debt Balance and its Composition

HE Revolving

Auto Loan Credit Card

2008Q3 Total: $12.68 Trillion

Student Loan Other

2016Q4 Total: $12.58 Trillion 2016Q3 Total: $12.35 Trillion

(3%)

(10%)

(6%)

(9%) (4%)

6

(67%)

3

0

Source: New York Fed Consumer Credit Panel/Equifax

4

Housing Debt is $1T Below Previous Peak; Student and Auto Debt up $700B and $350B

Trillions of Dollars 15

14

Housing Auto Loan

Student Loan

13

Credit Card

Other

12

11

10

9

$8.1 Trillion

8

5.6%

7

8.7% 3.1%

6

8.7%

5

73.9%

Total Debt by Type

$12.7 Trillion 3.3% 6.8% 5.0% 6.2% 78.6%

4

3

2

1

0 2003

2008

Source: New York Fed Consumer Credit Panel/Equifax

$12.6 Trillion 3.0% 6.2% 10.4% 9.2% 71.2%

2016 5

*data for 4th quarter of each year

Mortgage Underwriting Remains Tight, Though Auto Loans See Looser Standards

Score 800

Mortgages*

Auto Loans*

Score 800

750 50th

percentile

700 25th

percentile 650

10th percentile 600

550

750

50th percentile

700

25th

percentile

650

10th

600

percentile

550

500

500

04:Q1 06:Q1 08:Q1 10:Q1 12:Q1 14:Q1 16:Q1 04:Q1 06:Q1 08:Q1 10:Q1 12:Q1 14:Q1 16:Q1

Source: New York Fed Consumer Credit Panel/Equifax

* Credit Score is Equifax Riskscore 3.0; mortgages include first-liens only.

6

Older Borrowers (Age 60+) Take Greater Share of Debt

Trillions of Dollars 14

13

Age:

18-29

12

30-39

40-49

11

50-59

10

60+

Total Debt by Age of Borrower

$12.7 Trillion 15.9%

$12.6 Trillion 22.5%

9

$8.1 Trillion

8

12.6%

7

24.0%

24.1%

6

22.6%

5

29.4%

25.3%

4

31.0%

3

2

25.4%

1

0

8.4%

2003

Source: New York Fed Consumer Credit Panel/Equifax

22.9%

7.8%

2008

20.7%

7.5%

2016 7

*data for 4th quarter of each year

All Debt Grew for Oldest Borrowers, Only Student and Auto Debt for Younger Borrowers

1.6

1.4 Mortgage

1.2 1

0.8 0.6 0.4 0.2

0

Balances Relative to 2008 Peak, by Age

18-29

30-39

40-49

50-59

60+

1.4

1.2 Credit Card

1 0.8 0.6 0.4 0.2

0

2.5

Auto Loan

2 1.5

1 0.5

0

Source: New York Fed Consumer Credit Panel/Equifax

4.5

4 Student Loan

3.5 3

2.5 2

1.5 1

0.5 0

8

*data for 4th quarter of each year

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