household debt and credit - Politico

***EMBARGOED FOR RELEASE UNTIL 11AM ON NOVEMBER 19TH, 2015***

QUARTERLY REPORT ON

HOUSEHOLD DEBT AND CREDIT November 2015

FEDERAL RESERVE BANK OF NEW YORK RESEARCH AND STATISTICS GROUP

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MICROECONOMIC STUDIES


Household Debt and Credit Developments in 2015Q3 1

Aggregate household debt balances increased in the third quarter of 2015. As of September 30, 2015, total household indebtedness was $12.07 trillion, a $212 billion increase from the second quarter of 2015. Overall household debt remains 5% below its 2008Q3 peak of $12.68 trillion. Mortgage balances, the largest component of household debt, increased in the third quarter. Mortgage balances shown on consumer credit reports stood at $8.26 trillion, a $144 billion increase from the second quarter of 2015. Balances on home equity lines of credit (HELOC) dropped by $7 billion, to $492 billion. Non-housing debt balances increased in the second quarter, boosted by a $40 billion increase in auto loan balances, and gains in credit card and student loan balances of $11 billion and $13 billion respectively. New extensions of credit were robust in the third quarter. Mortgage originations, which we measure as appearances of new mortgage balances on consumer credit reports and which include refinanced mortgages, rose to $502 billion, a $36 billion increase from the previous quarter. Auto loan originations were $151 billion. The aggregate credit card limit increased for the 11th consecutive quarter, and was up by 1% from the previous quarter. HELOC limits were unchanged. The distribution of the credit scores of mortgage borrowers was mostly unchanged, with the increase in mortgage origination driven primarily by the borrowers with the highest credit scores: 59% of all new mortgage balances were to borrowers with credit scores above 780. Auto loan originations were robust across the board, with high levels of originations across all types of borrowers. Overall delinquency rates improved modestly in 2015Q3. As of September 30, 5.6% of outstanding debt was in some stage of delinquency. Of the $672 billion of debt that is delinquent, $455 billion is seriously delinquent (at least 90 days late or “severely derogatory”). About 225,000 consumers had a bankruptcy notation added to their credit reports in 2015Q3, 14% fewer than in the same quarter last year. Housing Debt • Mortgage originations increased to $502 billion, the fifth consecutive increase after a 14-year low in the second quarter of 2014. • About 93,000 individuals had a new foreclosure notation added to their credit reports between July 1 and September 30, a new low in the 16-year history of the data. • Mortgage delinquencies continued the improving trend seen in the past 5 years. 2.3% of mortgage balances were 90 days delinquent during 2015Q3, compared to 2.5% in the previous quarter. • Delinquent transition rates for current mortgage accounts were unchanged, with 1.2% of current balances transitioning to delinquency, while 18.8% of mortgage balances in early delinquency transitioned to 90+ days delinquent and 30.5% became current. Student Loans, Credit Cards, and Auto Loans • Outstanding student loan balances increased by $13 billion, to $1.20 trillion as of September 30, 2015. • 11.6% of aggregate student loan debt was 90+ days delinquent or in default in 2015Q3 2 • Auto loan balances reached $1.05 trillion, a $39 billion increase. 3.4% of auto loan balances are 90 or more days delinquent, unchanged since the second quarter. • Credit card balances increased by $11 billion, to $714 billion. Credit Inquiries • The number of credit inquiries within six months – an indicator of consumer credit demand – went up by 9 million from the previous quarter, to 182 million.

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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. 2 As explained in a recent report, delinquency rates for student loans are likely to understate actual 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.


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NATIONAL CHARTS

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Mortgage Originations by Credit Score* Billions of Dollars

Billions of Dollars 1,200

1,200