3Q2020 Household Debt Shows Consumer Debt Back On The Rise After Second Quarter Dip

from the New York Fed

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 $87 billion (0.6%) to $14.35 trillion in the third quarter of 2020. The increase more than offset the decline seen in the second quarter of 2020 as total household debt has surpassed its 2020Q1 reading.

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. This latest report reflects consumer credit data as of September 30, 2020.

Mortgage balances—the largest component of household debt—rose by $85 billion in the third quarter, and sat at $9.86 trillion on September 30. Mortgage originations, which include refinances, were at $1.05 trillion, the second-highest volume in the history of the series and second only to the historic refinance boom in 2003Q3. Balances on home equity lines of credit saw a $13 billion decline, their 15th consecutive decrease since 2016Q4, bringing the outstanding balance to $362 billion.

Credit card balances fell slightly in the third quarter by $10 billion, following the $76 billion decline in 2020Q2, the steepest decline in card balances in the history of the data (since 1999). The decline in card balances reflects continued weak consumer spending amidst the COVID-19 pandemic, as well as households paying down existing credit card debt.

Auto and student loan balances both increased slightly in the third quarter, by $17 billion and $9 billion, respectively. Auto loan originations, which includes both loans and leases, reached a series high in Q3. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) saw a $15 billion increase.

Aggregate delinquency rates across all debt products fell again in the third quarter, indicating the ongoing effect of forbearances provided by the CARES Act or voluntarily offered by lenders. New transitions into early delinquency have also fallen across product type. The various forbearance offerings and uptake have largely protected borrowers' credit files from being marked delinquent from missed payments. As of September 30, 3.4% of outstanding debt was in some stage of delinquency, a 0.2 percentage point decrease from the second quarter, and 1.4 percentage points lower than the rate observed in 2019Q4. About 132,000 consumers had a bankruptcy notation added to their credit reports in 2020Q3, a decline from the previous quarter and a new historical low.

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