Total Household Debt Increases

Total Household Debt Increases, Driven by Mortgage, Auto and Credit Card Debt

Credit Card Delinquency Flows Step Up Notably Over Past Year, While Delinquency Flows for Other Non-Housing Debt Worsen Modestly
August 15, 2017

NEW YORK – The Federal Reserve Bank of New York today issued its Quarterly Report on Household Debt and Credit,which reported that total household debt increased by $114 billion (0.9%) 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%, 2% and 2.6% respectively), no change to student loan debt and a modest decline in balances on home equity lines of credit (decreasing by 0.9%). 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.

Of note, credit card balance flows into both early and serious delinquencies increased from a year ago – a persistent upward movement not seen since 2009. Meanwhile, delinquency flows for other non-housing debt increased modestly, and in particular, the upward trend for auto loans in recent years continued. The New York Fed also issued an accompanying blog post which addresses the topic of transitions into delinquencies, examining recent developments in the consumer credit card market in more granularity.

“While relatively low, credit card delinquency flows climbed notably over the past year,” said Andrew Haughwout, senior vice president at the New York Fed. “This is occurring within the context of loosening lending standards, as borrowers with lower credit scores recover their ability to access credit cards. The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress.”

The Report includes a one-page summary of key takeaways and their supporting data points. Overarching trends from the Report’s summary include:

Housing Debt

  • Mortgage balances increased, originations declined and the median credit scores of borrowers for new mortgages declined slightly.
  • Mortgage delinquencies improved while foreclosure notations decreased and remained low by historical standards.

Non-Housing Debt

  • Auto loan balances continued their steady rise seen since 2011, with an increase in auto loan originations. Median credit scores of borrowers for these new loans declined slightly.
  • Credit card balances increased and the credit card serious delinquency rate remained flat.
  • Outstanding student loan balances were flat. The second quarter typically witnesses slow or no growth in student loan balances due to the academic cycle.

Bankruptcies & Delinquencies Overall

  • Aggregate delinquency rates were roughly flat again.
  • Bankruptcy notations increased and were roughly the same as the levels seen in Q2 2016.
  • Although low by historical standards, early delinquency flows deteriorated somewhat—with student loans, auto loans and mortgages seeing moderate increases. Meanwhile, credit card debt transitioning into early and serious delinquencies increased notably from a year ago.

Household Debt and Credit Developments as of Q2 2017

CATEGORY QUARTERLY CHANGE* ANNUAL CHANGE** TOTAL AS OF Q2 2017
MORTGAGE DEBT (+) $64 BILLION  (+) $329 BILLION $8.69 TRILLION
HOME EQUITY LINE OF CREDIT (-) $4 BILLION  (-) $26 BILLION $452 BILLION
STUDENT LOAN DEBT NO CHANGE  (+) $85 BILLION $1.34 TRILLION
AUTO LOAN DEBT (+) $23 BILLION  (+) $87 BILLION $1.19 TRILLION
CREDIT CARD DEBT (+) $20 BILLION  (+) $55 BILLION $784 BILLION
TOTAL DEBT (+) $114 BILLION (+) $552 BILLION $12.84 TRILLION

*Change from Q1 2017 to Q2 2017
**Change from Q2 2016 to Q2 2017

90+ day delinquency rates (known as “seriously delinquent”)

CATEGORY1 Q1 2017 Q2 2017
MORTGAGE DEBT 1.7% 1.5%
HOME EQUITY LINE OF CREDIT 2.1% 1.9%
STUDENT LOAN DEBT2 11.0% 11.2%
AUTO LOAN DEBT 3.8% 3.9%
CREDIT CARD DEBT 7.5% 7.4%
ALL 3.4% 3.3%

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