Tuesday, May 24, 2016

NY Fed: Household Debt Increased in Q1 2016, Delinquency Rates Declined

by Bill McBride on 5/24/2016 11:10:00 AM

The Q1 report was released today: Household Debt and Credit Report.

From the NY Fed: Household Debt Steps Up, Delinquencies Drop

Household indebtedness continued to advance during the first three months of 2016 according to the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit, which was released today. ...

The bulk of the $136 billion (1.1 percent) aggregate debt increase came from mortgages, which increased $120 billion from the fourth quarter of 2015 to a four and a half year high. The median credit score for newly originating mortgages increased slightly, and 58 percent of all new mortgage dollars went to borrowers with credit scores over 760. ...

Overall repayment rates generally improved in the first quarter of this year. Five percent of outstanding debt was in some stage of delinquency, the lowest amount since the second quarter of 2007.
...
"Delinquency rates and the overall quality of outstanding debt continue to improve," said Wilbert van der Klaauw, senior vice president at the New York Fed. "The proportion of overall debt that becomes newly delinquent has been on a steady downward trend and is at its lowest level since our series began in 1999. This improvement is in large part driven by mortgages."
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 Q1.  Household debt peaked in 2008, and bottomed in Q2 2013.

Mortgage debt increased in Q1, from the NY Fed:
Mortgage balances, the largest component of household debt, increased in the first quarter. Mortgage balances shown on consumer credit reports stood at $8.37 trillion, a $120 billion increase from the fourth quarter of 2015. Balances on home equity lines of credit (HELOC) dropped by $2 billion, to $485 billion. Non-housing debt balances rose somewhat in the first quarter; increases of $7 billion and $29 billion in auto and student loans, respectively, were offset by a $21 billion decline in credit card balances.
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 Q1 to 5.0%.  From the NY Fed:
Overall delinquency rates improved in 2016Q1. As of March 31, 5.0% of outstanding debt was in some stage of delinquency. Of the $613 billion of debt that is delinquent, $436 billion is seriously delinquent (at least 90 days late or “severely derogatory”).
There are a number of credit graphs at the NY Fed site.