QUA RTERLY REPORT ON HOUSEHOLD DEBT AND CREDIT

CENTER FOR MICROECONOMIC DATA

W W W. N E W Y O R K F E D . O R G / M I C R O E C O N O M I C S

Q U A RT E RLY R E P O RT O N

HOUSEHOLD DEBT AND CREDIT

2018:Q2 (RELEASED AUGUST 2018 )

FEDERAL RESERVE BANK of NEW YORK

RESEARCH AND STATISTICS GROUP

ANALYSIS BASED ON NEW YORK FED CONSUMER CREDIT PANEL/EQUIFAX DATA

Household Debt and Credit Developments in 2018Q21

Aggregate household debt balances increased in the second quarter of 2018 for the 16th consecutive quarter, and are now $618 billion higher than the previous (2008Q3) peak of $12.68 trillion. As of June 30, 2018, total household indebtedness was $13.29 trillion, an $82 billion (0.6%) increase from the first quarter of 2018. Overall household debt is now 19.2% above the 2013Q2 trough.

Mortgage balances, the largest component of household debt, increased slightly during the second quarter. Mortgage balances shown on consumer credit reports on June 30 stood at $9.0 trillion, an increase of $60 billion from the first quarter of 2018. Balances on home equity lines of credit (HELOC), on a declining trend since 2009, saw a $4 billion drop in the second quarter and are now at $432 billion. Non-housing balances saw a $26 billion increase in the second quarter, with auto loans and credit cards increasing by $9 billion and $14 billion respectively.

New extensions of credit for mortgage and auto loans increased in the second quarter. Mortgage originations, which we measure as appearances of new mortgage balances on consumer credit reports and include refinanced mortgages, were at $437 billion, a small increase from 2018Q1. Mortgage originations have been relatively stable in the past six quarters. There were $151 billion in auto loan originations in the second quarter of 2018, the highest quarterly amount seen since the high level reached in 2005, continuing the nine year upward trend. The aggregate credit card limit rose for the 22nd consecutive quarter, with a 1.4% increase.

The median credit score of newly originating borrowers was roughly unchanged for mortgages. For auto loan originators, the median score declined by 5 points, as individuals with subprime scores maintained a substantial share of newly originated auto loans.

Aggregate delinquency rates improved in the second quarter of 2018. As of June 30, 4.5% of outstanding debt was in some stage of delinquency, a very small improvement from the last quarter. Of the $598 billion of debt that is delinquent, $403 billion is seriously delinquent (at least 90 days late or "severely derogatory"). The flow into 90+ day delinquency for credit card balances has been rising for the last year and remained elevated during the second quarter, while the flow into 90+ day delinquency for auto loan balances has been slowly trending upward since 2012.

About 225,000 consumers had a bankruptcy notation added to their credit reports in 2018Q2, about the same number observed in the same quarter of last year. New bankruptcy notations have been at historically low levels since 2016.

Housing Debt There was $437 billion in newly originated mortgage debt in 2018Q2. Mortgage delinquencies continued to improve, with 1.1% of mortgage balances 90 or more days delinquent in 2018Q2. Delinquency transition rates for current mortgage balances were stable, with about 1.0% of current balances transitioning to

delinquency. There was some improvement of transitions from early delinquency, as 13.4 of mortgages in early delinquency (3060 days late) transitioned to 90+ days delinquent, an improvement on the previous quarter's 14.7% transition rate. The share of mortgages in early delinquency that "cured" improved to 42.9%, from 40.5% in the 1st quarter and from 35.9% in the 4th quarter of 2017. About 76,000 individuals had a new foreclosure notation added to their credit reports between April 1 and June 30, unchanged from the previous quarter. Foreclosures remain very low by historical standards.

Student Loans Outstanding student loan debt fell by $2 billion in the second quarter, and stood at $1.41 trillion as of June 30, 2018. 10.9% of aggregate student debt was 90+ days delinquent or in default in 2018Q2, a small increase from the prior quarter, but 2.5%

lower than in 2017Q2.2 Transition rates into delinquency have fallen noticeably for student debt over the past year.

Account Closings, Credit Inquiries and Collection Accounts There was a noticeable uptick in account closings over the past year to 218 million, a 9.7% increase from its 2018Q1 level. The number of credit inquiries within the past six months ? an indicator of consumer credit demand ?was roughly flat, and

remains among the lowest seen in the 19 year history of the data. The percent of consumers with an account in collections declined significantly between the 4th quarter of 2017 and 2nd quarter of

2018, due to changes in reporting requirements of collections agencies.

1 This report is based on the New York Fed Consumer Credit Panel, which is constructed from a nationally representative random sample drawn from Equifax credit report data. For details on the data set and the measures reported here, see the data dictionary available at the end of this report. Please contact Joelle Scally with questions at joelle.scally@ny.. 2 As explained in a 2012 report, delinquency rates for student loans are likely to understate effective delinquency rates because about half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.

1

Page Left Blank Intentionally

NATIONAL CHARTS

2

3

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download