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posted on 15 August 2015

2Q2014 Report on Household Debt and Credit: Auto Loans Race Ahead, Foreclosures Plunge, and Overall Household Debt Remains Flat

from the New York Fed

Household debt balances were largely flat in the second quarter of this year, according to the Federal Reserve Bank of New York's Household Debt and Credit Report. Total indebtedness increased just $2 billion from Q1 2015. Foreclosures hit their lowest point in the 16-year history of the New York Fed's Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data.

Auto loan originations reached a 10-year high in the second quarter, at $119 billion, supporting a $38 billion increase in the aggregate auto loan balance, which has now passed $1 trillion. The increase in auto loans also drove most of the $67 billion increase in non-housing debt balances. Credit card balances increased, by $19 billion, to $703 billion, while student loan balances remained flat. Mortgage balances and HELOC dropped by $55 billion and $11 billion, respectively.

There were $466 billion in new mortgage originations in the second quarter. Two new charts introduced in this quarter's report show that just under half of the Q2 strength in originations were driven by borrowers with credit scores over 780. By contrast, only 8 percent ($38 billion) of all new mortgages were originated by borrowers with credit scores below 660.

About 95,000 people had a new foreclosure notation added to their credit reports between April 1 and June 30, a new low in the 16-year history of the data. Overall new delinquency rates improved, continuing a trend that began in 2009. As of the end of the second quarter, 5.6 percent of outstanding debt was in some stage of delinquency.

"Persistently tight underwriting standards imply that new mortgages continue to be originated predominantly to the most creditworthy borrowers," said Wilbert van der Klaauw, Senior Vice President at the New York Fed. "The low rates of delinquency and new foreclosures reflect the higher quality of outstanding mortgage debt and improved economic conditions."

Household Debt and Credit Developments as of Q2 2015:

Category

Quarterly Change*

Annual Change**

Total As Of Q2 2015

Mortgage Debt

(-) $55 billion

(+) $20 billion

$8.12 trillion

HELOC

(-) $11 billion

(-) $22 billion

$499 billion

Student Loan Debt

(+) $1 billion

(+) $72 billion

$1.19 trillion

Auto Loan Debt

(+) $38 billion

(+) $101 billion

$1.01 trillion

Credit Card Debt

(+) $19 billion

(+) $34 billion

$703 billion

Total Debt

(+) $2 billion

$221 billion

$11.85 trillion

*Change from Q1 2015 to Q2 2015
**Change from Q2 2014 to Q2 2015

90+ day delinquency rates:

Category

Q2 2015

Q1 2015

Mortgages

2.5%

3.0%

HELOC

3.2%

3.0%

Student Loans

11.5%

11.1%

Auto Loans

3.4%

3.3%

Credit Cards

8.4%

8.4%

All

4.0%

4.3%

1 Delinquency rates are computed as the proportion of the total debt balance that is at least 90 days past due.

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.

About the report
The Federal Reserve Bank of New York's Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed's Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. The report aims to help community groups, small businesses, state and local governments and the public to better understand, monitor and respond to trends in borrowing and indebtedness at the household level. Sections of the report are presented as interactive graphs on the New York Fed's Household Credit web page and the full report is available for download.


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