Thursday, November 14, 2013

NY Fed: Household Debt increased in Q3, Delinquency Rates Improve

by Bill McBride on 11/14/2013 11:00:00 AM

Here is the Q3 report: Household Debt and Credit Report

Aggregate consumer debt increased in the third quarter by $127 billion, the largest increase seen since the first quarter of 2008. As of September 30, 2013, total consumer indebtedness was $11.28 trillion, up by 1.1% from its level in the second quarter of 2013. Overall consumer debt remains 11% below its peak of $12.68 trillion in 2008Q3.

Mortgages, the largest component of household debt, increased by 0.7% in the third quarter of 2013. Mortgage balances shown on consumer credit reports stand at $7.90 trillion, up by $56 billion from their level in the second quarter. Balances on home equity lines of credit (HELOC) dropped by $5 billion (0.9%) and now stand at $535 billion. Household non-housing debt balances increased by 2.7%, with gains of $31 billion in auto loan balances, $33 billion in student loan balances, and $4 billion in credit card balances.
About 355,000 consumers had a bankruptcy notation added to their credit reports in 2013Q3, roughly flat compared to the same quarter last year.
emphasis added
Total Household Debt Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q3.

This suggests households (in the aggregate) may be near the end of deleveraging.  If so, this is a significant change.

Delinquency Status The second graph shows the percent of debt in delinquency. In general, the percent of delinquent debt is declining, but what really stands out is the percent of debt 90+ days delinquent (Yellow, orange and red). 

From the NY Fed:
Delinquency rates improved for most loan types in 2013Q3. As of September 30, 7.4% of outstanding debt was in some stage of delinquency, compared with 7.6% in 2013Q2. About $831 billion of debt is delinquent, with $600 billion seriously delinquent (at least 90 days late or “severely derogatory”).

Delinquency transition rates for current mortgage accounts are near pre-crisis levels, with 1.6% of current mortgage balances transitioning into delinquency.
Here is the press release from the NY Fed: New York Fed Report Shows Household Debt Rises in Third Quarter

There are a number of credit graphs at the NY Fed site.