NY Fed: Household Debt declined in Q2 as Deleveraging Continues - InvestingChannel

NY Fed: Household Debt declined in Q2 as Deleveraging Continues

From the NY Fed: Auto Loan Balances Increase for Ninth Straight Quarter, New York Fed Report Shows

In its latest Household Debt and Credit Report, the Federal Reserve Bank of New York announced that outstanding household debt declined by $78 billion from the previous quarter, due in large part to a decline in housing-related debt. Total auto loan balances increased $20 billion from the previous quarter, the ninth consecutive quarterly increase and the largest quarter over quarter increase since 2006. …

In Q2 2013 total household indebtedness fell to $11.15 trillion; 0.7 percent lower than the previous quarter and 12 percent below the peak of $12.68 trillion in Q3 2008. Mortgages, the largest component of household debt, fell $91 billion from the first quarter.

“Although overall debt declined in the second quarter, households did increase non-housing debt, led by rising auto loan balances,” said Andrew Haughwout, vice president and research economist at the New York Fed. “Furthermore, households improved their overall delinquency rates for the seventh straight quarter, an encouraging sign going forward.”

emphasis added

Here is the Q2 report: Household Debt and Credit Report

Mortgages, the largest component of household debt, fell in the second quarter of 2013, although the fall was in part due to reporting gaps associated with the servicing transfer of a higher-than-usual number of loans. Mortgage balances shown on consumer credit reports stand at $7.84 trillion, down $91 billion from the level in the first quarter of 2013. Balances on home equity lines of credit (HELOC) dropped by $12 billion (2.2%) and now stand at $540 billion. Household non-housing debt balances increased by 0.9%, bolstered by gains of $20 billion in auto loan balances, $8 billion in student loan balances, and $8 billion in credit card balances.

About 380,000 consumers had a bankruptcy notation added to their credit reports in 2013Q2, a 4.8% drop from the same quarter last year, the tenth consecutive quarter with a drop in bankruptcies on a year-over-year basis.

Here are two graphs from the report:

Total Household Debt Click on graph for larger image.

The first graph shows aggregate consumer debt decreased in Q2.

Although overall debt is decreasing, Student debt (red) is still increasing. From the NY Fed:

Outstanding student loan balances increased to $994 billion as of June 30, 2013, a $8 billion uptick from the first quarter

Delinquency Status The second graph shows the percent of debt in delinquency. In general, the percent of delinquent debt is declining, but what really stands out is the percent of debt 90+ days delinquent (Yellow, orange and red). 

From the NY Fed:

Delinquency rates improved considerably in 2013Q2. As of June 30, 7.6% of outstanding debt was in some stage of delinquency, compared with 8.1% in 2013Q1. About $845 billion of debt is delinquent, with $635 billion seriously delinquent (at least 90 days late or “severely derogatory”).

There are a number of credit graphs at the NY Fed site.

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