Tuesday, August 14, 2018

NY Fed Q2 Report: "Total Household Debt Rises for 16th Straight Quarter"

by Bill McBride on 8/14/2018 11:09:00 AM

From the NY Fed: Total Household Debt Rises for 16th Straight Quarter

he Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which shows that total household debt increased by $82 billion (0.6%) to $13.29 trillion in the second quarter of 2018. It was the 16th consecutive quarter with an increase, and the total is now $618 billion higher than the previous peak of $12.68 trillion, from the third quarter of 2008. Further, overall household debt is now 19.2% above the post-financial-crisis trough reached during the second quarter of 2013. 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.

Mortgage balances—the largest component of household debt—rose by $60 billion during the second quarter, to $9.00 trillion. Balances on home equity lines of credit (HELOC) continued their downward trend, declining by $4 billion, to $432 billion. The median credit score of newly originating mortgage borrowers was roughly unchanged, at 760.

"Aggregate household debt grew for the 16th consecutive quarter in the second quarter of 2018," said Wilbert van der Klaauw, senior vice president at the New York Fed, "While overall delinquency rates have remained stable at relatively low levels, transition rates into delinquency have fallen noticeably for student debt over the past year, reflecting an improved labor market and increased participation in various income-driven repayment plans."
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 2018 for the 16th consecutive quarter, and are now $618 billion higher than the previous (2008Q3) peak of $12.68 trillion. As of June 30, 2018, total household indebtedness was $13.29 trillion, an $82 billion (0.6%) increase from the first quarter of 2018. Overall household debt is now 19.2% above the 2013 Q2 trough.

Mortgage balances, the largest component of household debt, increased slightly during the second quarter. Mortgage balances shown on consumer credit reports on June 30 stood at $9.0 trillion, an increase of $60 billion from the first quarter of 2018. Balances on home equity lines of credit (HELOC), on a declining trend since 2009, saw a $4 billion drop in the second quarter and are now at $432 billion. Non-housing balances saw a $26 billion increase in the second quarter, with auto loans and credit cards increasing by $9 billion and $14 billion respectively.
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 decreased in Q2.  From the NY Fed:
Aggregate delinquency rates improved in the second quarter of 2018. As of June 30, 4.5% of outstanding debt was in some stage of delinquency, a very small improvement from the last quarter. Of the $598 billion of debt that is delinquent, $403 billion is seriously delinquent (at least 90 days late or “severely derogatory”). The flow into 90+ day delinquency for credit card balances has been rising for the last year and remained elevated during the second quarter, while the flow into 90+ day delinquency for auto loan balances has been slowly trending upward since 2012.

About 225,000 consumers had a bankruptcy notation added to their credit reports in 2018Q2, about the same number observed in the same quarter of last year. New bankruptcy notations have been at historically low levels since 2016.
There is much more in the report.