Increased household debt, late payments ‘extremely low’

by calculated risks 11/15/2022 11:15:00 AM

From the New York Federal Reserve: Household debt totaled $16.51 trillion in the third quarter of 2022; Mortgage facilities and auto loans decline

The Microeconomic Data Center of the Federal Reserve Bank of New York today released its quarterly report on Household Debt and Credit. The report shows an increase in total household debt in the third quarter of 2022, rising by $351 billion (2.2%) to $16.51 trillion. The balances are now $2.36 trillion higher than they were at the end of 2019, before the pandemic recession. The report is based on data from the nationally representative Consumer Credit Committee of the New York Federal Reserve.

Mortgage balances increased by $282 billion in the third quarter of 2022 and reached $11.67 trillion at the end of September, representing an increase of $1 trillion over the previous year. Credit card balances also increased by $38 billion. The annual increase in credit card balances of 15% is the largest in more than 20 years. Auto loan balances increased by $22 billion in the third quarter, consistent with the upward trajectory seen since 2011. Student loan balances decreased slightly and now stand at $1.57 trillion. In all, non-residential balances grew by $66 billion.

Mortgage facilities, which include refinancing, reached $633 billion in the third quarter, which is a $126 billion decrease from the second quarter and a return to pre-pandemic volumes. New auto loan volume was $185 billion, down slightly from the previous quarter but still high compared to average volumes seen during 2018-19. Total limits for credit card accounts have increased by $82 billion and now stand at $4.3 trillion.

“Credit card, mortgage and auto loan balances continued to increase in the third quarter of 2022, reflecting a combination of strong consumer demand and rising prices,” said Donghoon Lee, an economic research advisor at the Federal Reserve Bank of New York. “However, new mortgage originations have slowed to pre-pandemic levels amid rising interest rates.”
Affirmations added

Click on the chart for a larger image.

Here are three charts from the report:

The first graph shows the increase in total consumer debt in the third quarter. Household debt previously peaked in 2008 and bottomed out in the third quarter of 2013. Unlike in the aftermath of the Great Recession, there has been no significant drop in debt during the pandemic.

From the Federal Reserve Bank of New York:

Total household debt stocks increased by $351 billion in the third quarter of 2022, an increase of 2.2% from the second quarter of 2022. The balances now stand at $16.51 trillion and have increased by $2.36 trillion since the end of 2019, before the pandemic recession.

case of late payment The second graph shows the percentage of overdue debts.

The overall late payment rate did not change in the third quarter. From the Federal Reserve Bank of New York:

Overall late payment rates were unchanged in the third quarter of 2022 and remained very low, having fallen sharply during the start of the pandemic. As of September, 2.7% of outstanding debt was at some point in default, down 2.1 percentage points from the last quarter of 2019, before the COVID-19 pandemic hit the United States.

Mortgage facilities by credit score The third chart shows the origination of the mortgage by credit score.

From the Federal Reserve Bank of New York:

Mortgage originations, measured as the appearance of new mortgages in Consumer Credit Reports, fell to $633 billion in the third quarter of 2022, ending a period generating significant volumes through the pandemic. … The average credit score for emerging mortgages is down again, to 768, down from a Q1 2021 high of 788 and back to pre-Covid levels that remain very high and reflect continued high lending standards.

There is a lot in the report.

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