Press Release

Household Debt Continues to Climb in Third Quarter as Mortgage and Auto Loan Originations Grow

Growth in mortgage lending seen across all age groups
November 13, 2019

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 $92 billion (0.7%) to $13.95 trillion in the third quarter of 2019. This marks the 21st consecutive quarter with an increase, and the total is now $1.3 trillion higher, in nominal terms, than the previous peak of $12.68 trillion in the third quarter of 2008. 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 $31 billion in the third quarter to $9.44 trillion. Balances on home equity lines of credit (HELOC), which have been declining since 2009, fell by $3 billion this quarter, bringing the aggregate outstanding balance to $396 billion. Non-housing debt balances rose by $64 billion in the third quarter, with increases seen across a variety of debt types, including $18 billion in auto loans, $13 billion in credit card balances, and $20 billion in student loans.

Auto loan originations remained high in the third quarter at $159 billion, a small increase from the volume seen in the second quarter of 2019. Mortgage originations, which include mortgage refinances, stood at $528 billion this quarter compared to $445 billion in Q3 2018.

Credit standards tightened slightly in the third quarter of 2019, with the median credit score of newly originating mortgage borrowers rising to 765, a 6-point increase from the previous quarter. The median credit score for new auto loan originations increased to 711, an 8-point jump from in the second quarter of 2019.

“New credit extensions were strong in the third quarter of 2019, with auto loan originations reaching near-record highs and mortgage originations increasing significantly year-over-year,” said Donghoon Lee, research officer at the New York Fed. “The data suggest that households are taking advantage of a low-interest rate environment to secure credit.”

The New York Fed also issued an accompanying blog post that explores disparities in student loan outcomes by borrower race.

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

  • Flows into delinquency among mortgage loans were mostly unchanged from last quarter, as 1.0% of mortgage balances became 90+ days delinquent in Q3 2019. This is the lowest level observed in the data history.
  • Foreclosures remain very low by historical standards. Approximately 65,000 individuals had a new foreclosure notation added to their credit reports between July 1- September 30, 2019.

Student Loans

  • Outstanding student debt stood at $1.50 trillion in the third quarter of 2019, an increase of $20 billion from Q2 2019.  
  • 10.9% of aggregate student debt was 90+ days delinquent or in default in Q3 2019. The transition rate in 90+ days delinquent among student loans was 9.3%, an improvement from the previous quarter.

Account Closings, Credit Inquiries and Credit Inquiries

  • The number of credit inquiries within the past six months – an indicator of consumer credit demand – was at 142 million, a small increase from the previous quarter.
  • Account closings declined in the third quarter but remained in line with the past year’s trend, with 211 million accounts closed within the past 12 months.

Household Debt and Credit Developments as of Q3 2019


Category
Quarterly Change*
(Billions $)
Annual Change**
(Billions $)
Total as of Q3 2019
(Trillions $)
Mortgage Debt (+) $31 (+) $297 $9.44
Home Equity Line of Credit

(-) $3 (-) $26 $0.40
Student Debt (+) $20 (+) $56 $1.50
Auto Debt (+) $18 (+) $50 $1.32
Credit Card Debt (+) $13 (+) $37 $0.88
Other (+) $13 (+) $26 $0.43
Total Debt (+) $92 (+) $440 $13.95

*Change from Q2 2019 to Q3 2019
**Change from Q3 2018 to Q3 2019

Flow into Serious Delinquency (90 days or more delinquent) 1


Category 2
Q2 2019 Q3 2019
Mortgage Debt 1.04% 0.99%
Home Equity Line of Credit 0.72% 0.83%
Student Loan Debt 3 9.89% 9.26%
Auto Loan Debt 2.34% 2.34%
Credit Card Debt 5.17% 5.16%
Other 4.77% 4.67%
ALL 2.37% 2.27%

1 Annualized as a four-quarter moving sum.

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 of 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 Debt and Credit Report web page and the full report is available for download.

Contact
Desmond Lee
(212) 720-2416
desmond.lee@ny.frb.org