Wednesday, August 16, 2017

NY Fed: "Household Borrowing Grows Modestly; Credit Card Delinquencies Rise"

by Bill McBride on 8/16/2017 02:53:00 PM

From the NY Fed: Household Borrowing Grows Modestly; Credit Card Delinquencies Rise

The CMD’s latest Quarterly Report on Household Debt and Credit reveals that total household debt rose by $114 billion (0.9 percent) to $12.84 trillion in the second quarter of 2017. There were modest increases in mortgage, auto, and credit card debt (increasing by 0.7 percent, 2 percent, and 2.6 percent respectively), no change to student loan debt, and a decline in home equity lines of credit (which fell by 0.9 percent). Flows of credit card balances into both early and serious delinquencies climbed for the third straight quarter—a trend not seen since 2009.
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 Q2.  Household debt previously peaked in 2008, and bottomed in Q2 2013.

From the NY Fed:
Aggregate household debt balances increased in the second quarter of 2017, for the 12th consecutive quarter, and are now $164 billion higher than the previous (2008Q3) peak of $12.68 trillion. As of June 30, 2017, total household indebtedness was $12.84 trillion, a $114 billion (0.9%) increase from the first quarter of 2017. Overall household debt is now 15.1% above the 2013Q2 trough.

Mortgage balances, the largest component of household debt, increased again during the first quarter. Mortgage balances shown on consumer credit reports on June 30 stood at $8.69 trillion, an increase of $64 billion from the first quarter of 2017. Balances on home equity lines of credit (HELOC) were roughly flat, and now stand at $452 billion. Non-housing balances were up in the second quarter. Auto loans grew by $23 billion and credit card balances increased by $20 billion, while student loan balances were roughly flat.
Delinquency Status The second graph shows the percent of debt in delinquency. There is still a larger than normal percent of debt 90+ days delinquent (Yellow, orange and red).

The overall delinquency rate was mostly unchanged in Q2.  From the NY Fed:
Aggregate delinquency rates were flat in the second quarter of 2017. As of June 30, 4.8% of outstanding debt was in some stage of delinquency. Of the $612 billion of debt that is delinquent, $411 billion is seriously delinquent (at least 90 days late or “severely derogatory”). Early delinquency flows deteriorated somewhat in the second quarter from a year ago, although they have improved markedly since the recession. Student loans, auto loans, and mortgages all saw modest increases in their early delinquency flows, while delinquency flows on credit card balances ticked up notably in the second quarter.
There is much more in the report.