by Calculated Risk on 2/17/2021 11:19:00 AM

From the NY Fed: Total Household Debt Increased in Q4 2020, Newly Originated Mortgages Reach Record High

The Federal Reserve Bank of New York's Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows that total household debt increased by $206 billion (1.4%) to $14.56 trillion in the fourth quarter of 2020, driven in part by a steep increase in mortgage originations. The total debt balance is now $414 billion higher than the year prior.
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Mortgage balances—the largest component of household debt—surpassed $10 trillion in the fourth quarter, increasing by $182 billion to $10.04 trillion at the end of December. While credit card balances increased by $12 billion over the quarter, they were $108 billion lower than they had been at the end of 2019, the largest year over year decline since the series began in 1999. This overall decline is consistent with continued weakness in consumer spending and revolving balance paydowns by card holders.

Auto and student loan balances increased by $14 billion and $9 billion, respectively. In total, non-housing balances (including credit card, auto loan, student loan, and other debts) increased by $37 billion during the fourth quarter but remained below end-2019 levels.

Newly originated mortgages reached a record high and auto loan originations reached their second highest quarterly volume since 2000. Mortgage originations, which include refinances, were at $1.2 trillion, surpassing in nominal terms the volumes seen during the historic refinance boom in 2003Q3. Auto loan originations, which includes both loans and leases, were down slightly from the record high seen in the third quarter but were at the second highest level for the series, at $162 billion.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows aggregate consumer debt increased in Q4.  Household debt previously peaked in 2008, and bottomed in Q3 2013.

From the NY Fed:

Aggregate household debt balances increased by $206 billion in the fourth quarter of 2020, a 1.4% rise from 2020Q3, and now stand at $14.56 trillion. Balances are $414 billion higher than at the end of 2019.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate decreased in Q4.  From the NY Fed:

Aggregate delinquency rates have continued to decline in the fourth quarter and continuing what was seen in the second and third, reflecting an uptake in forbearances (provided by both the CARES Act and voluntarily offered by lenders), which protect borrowers’ credit records from the reporting of skipped or deferred payments. As of late December, 3.2% of outstanding debt was in some stage of delinquency, a 0.2 percentage point decrease from the third quarter, and 1.6 percentage points lower than the rate observed in the fourth quarter of 2019 and before the Covid pandemic hit the United States. Of the $462 billion of debt that is delinquent, $349 billion is seriously delinquent (at least 90 days late or “severely derogatory”, which includes some debts that have been removed from lenders’ books but upon which they continue to attempt collection).

The uptake in forbearances continues to be visible in the delinquency transition rates for mortgages. The share of mortgages that transitioned to early delinquency ticked down to a low 0.4%, as the option to enter forbearance remained. Meanwhile, 54% of loans in early delinquency transitioned to current. Foreclosures remain on pause for most loans due to the CARES-provisioned moratorium, and the fourth quarter saw only 14,000 new foreclosure starts.

There is much more in the report.