NEW YORK—The 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."
The New York Fed also issued an accompanying blog post that examines the impact of the removal of third-party collection accounts from credit reports following the implementation of the National Consumer Assistance Plan.
The Report includes a one-page summary of key takeaways and their supporting data points. Overarching trends from the Report’s summary include:
- Mortgage originations edged up to $437 billion in the second quarter, from $428 billion in the first quarter.
- Mortgage delinquencies continued to improve, with 1.1% of mortgage balances 90 or more days delinquent in the second quarter, versus 1.2% in the first quarter.
- Outstanding student loan debt was mostly unchanged in the second quarter and stood at $1.41 trillion as of June 30.
- Auto loan balances continued their six-year upward trend, increasing by $9 billion in the quarter, to $1.24 trillion.
- Credit card balances rose by $14 billion, or 1.7%, after a seasonal decline in the first quarter.
Delinquencies, Collection Accounts, and Credit Inquiries
- Credit card delinquency rates eased slightly, with 7.9% of balances 90 or more days delinquent as of June 30, versus 8.0% at March 31.
- The share of consumers with an account in collections fell 23.4% between the third quarter of 2017 and the second quarter of 2018, from 12.3% to 9.4%, due to changes in reporting requirements of collections agencies. This decline and its implications for affected borrowers is the focus of a Liberty Street Economics blog post released today.
- The number of credit inquiries within the past six months—an indicator of consumer credit demand—was roughly unchanged, and remains among the lowest levels seen in the history of the data.
Household Debt and Credit Developments as of Q2 2018
|Quarterly Change*||Annual Change**||Total as of Q2 2018|
|Mortgage Debt||(+) $60 billion||(+) $308 billion||$9.00 trillion|
|Home Equity Line of Credit||(-) $4 billion||(-) $20 billion||$432 billion|
|Student Loan Debt||(-) $2 billion||(+) $61 billion||$1.41 trillion|
|Auto Loan Debt||(+) $9 billion||(+) $48 billion||$1.24 trillion|
|Credit Card Debt||(+) $14 billion||(+) $45 billion||$829 billion|
|Total Debt||(+) $82 billion||(+) $454 billion||$13.29 trillion|
*Change from Q1 2018 to Q2 2018
**Change from Q2 2017 to Q2 2018
Flow into Serious Delinquency (90 days or more delinquent) 1
|Q1 2018||Q2 2018|
|Home Equity Line of Credit||1.0%||1.1%|
|Student Loan Debt 3||8.9%||8.6%|
|Auto Loan Debt||2.3%||2.3%|
|Credit Card Debt||4.7%||4.8%|
2 Rates represent annualized shares of balances transitioning into delinquency. Flow into serious delinquency is computed as the balances that have newly become at least 90 days late in the reference quarter divided by the balances that were current or less than 90 days past due in the previous quarter.
3 As explained in a previous report, delinquency rates for student loans are likely to understate effective delinquency rates because about 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.
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 anonymized 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.