In its latest Household Debt and Credit Report, the Federal Reserve Bank of New York announced that households continued to improve their finances during the first three months of 2013. Outstanding household debt declined approximately $110 billion from the previous quarter, due in large part to a reduction in housing-related debt and credit card balances. Meanwhile, delinquency rates for each form of household debt declined, with about 8.1 percent of outstanding debt in some stage of delinquency, compared with 8.6 percent the previous quarter. The Quarterly Report is based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from anonymized Equifax credit data.
In Q1 2013 total household indebtedness fell to $11.23 trillion, 1.0 percent lower than the previous quarter and considerably below the peak of $12.68 trillion in Q3 2008.
Delinquency rates improved across the board: mortgages (5.4 percent from 5.6 percent), HELOC (3.2 percent from 3.5 percent), auto loans (3.9 percent from 4.0 percent), credit cards (10.2 percent from 10.6 percent) and student loans1(11.2 percent from 11.7 percent). The overall 90+ day delinquency rate dropped from 6.3 percent to 6.0 percent this quarter, below the 8.7 percent peak from three years ago.
“After a temporary deceleration in the previous quarter, the data suggest that household deleveraging has resumed its previous trajectory,” said Wilbert van der Klaauw, senior vice president and economist at the New York Fed. “We’ll look to see if this pace of debt reduction and delinquency improvements will persist in upcoming quarters.”
Other positive developments in Q1 included a rise in the share of 30-60 day delinquent mortgage balances that transitioned to current and a decline in the rate at which current mortgages transition into delinquency. Nearly 35 percent of 30-60 day delinquent balances became current compared to 28 percent in the previous quarter. Moreover, 1.6 percent of current balances became delinquent compared to 1.8 percent in the previous quarter.
Other highlights from the report include:
- Outstanding student loan debt increased $20 billion to $986 billion.
- Total mortgage debt decreased to $7.93 trillion from $8.03 trillion.
- Auto loans increased $11 billion to $794 billion.
- Credit card balances decreased $19 billion to $660 billion.
- HELOC balances fell $11 billion to $552 billion.
- Mortgage originations rose for the sixth consecutive quarter, to $577 billion.
- 184,000 individuals had new foreclosure notations added to their credit reports, down 12.5 percent from the previous quarter, the fourth consecutive quarterly decline.
About the report: The Federal Reserve Bank of New York’s Household Debt and Credit Report provides unique data and insight into the credit conditions and activity of U.S. consumers. Based on data from the New York Fed’s Consumer Credit Panel, a nationally representative sample drawn from Equifax credit data, the report provides a quarterly snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. The report aims to help community groups, small businesses, state and local governments and the public to better understand, monitor and respond to trends in borrowing and indebtedness at the household level. Sections of the report are presented as interactive graphs on the New York Fed’s Household Credit web page and the full report is available for download.
1 As explained in our last report, delinquency rates for student loans are likely to understate actual delinquency rates because almost half of these loans are currently in deferment, in grace periods or in forbearance and therefore temporarily not in the repayment cycle. This implies that among loans in the repayment cycle delinquency rates are roughly twice as high.