Friday, February 12, 2016

NY Fed: Household Debt Increased "Modestly" in Q4 2015, Delinquency Rates Declined

by Bill McBride on 2/12/2016 11:14:00 AM

The Q4 report was released today: Household Debt and Credit Report.

From the NY Fed: Household Debt Grows Modestly

Household debt increased moderately and repayment rates improved during the last three months of 2015, according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit. The $51 billion increase put total household indebtedness at $12.12 trillion as of the end of last year. Additionally, only 5.4 percent of outstanding debt was in some stage of delinquency, the lowest rate since the second quarter of 2007. The report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.

Modest aggregate debt growth was partially attributable to flat mortgage balances. Balances on home equity lines of credit continued a decline that began more than four years ago, falling last quarter by $5 billion. In contrast, auto debt, which has steadily advanced every quarter since mid-2011, increased again by $19 billion. ...

Overall delinquency rates improved last quarter, a development driven largely by mortgages. Just 2.2 percent of mortgage balances were 90+ days delinquent, a slight improvement from the third quarter’s 2.3 percent. Overall 90+ day delinquencies dropped to their lowest level since the beginning of 2008.
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 Q4.  Household debt peaked in 2008, and bottomed in Q2 2013.

Mortgage debt declined slightly in Q4, from the NY Fed:
Mortgage balances, the largest component of household debt, were roughly flat in the fourth quarter. Mortgage balances shown on consumer credit reports stood at $8.25 trillion, an $11 billion drop from the third quarter of 2015. Balances on home equity lines of credit (HELOC) dropped by $5 billion, to $487 billion. Non-housing debt balances continued to increase in the fourth quarter, with a $19 billion increases each in auto loan and credit card balances respectively. Student loan balances increased by $29 billion
Delinquency Status The second graph shows the percent of debt in delinquency. The percent of delinquent debt is declining, although there is still a large percent of debt 90+ days delinquent (Yellow, orange and red). 

The overall delinquency rate decreased in Q4 to 5.4%.  From the NY Fed:
Overall delinquency rates improved modestly in 2015Q4. As of December 31, 5.4% of outstanding debt was in some stage of delinquency. Of the $652 billion of debt that is delinquent, $442 billion is seriously delinquent (at least 90 days late or “severely derogatory”).
There are a number of credit graphs at the NY Fed site.